product elsewhere in the economy. Thus, while eliminating trade barriers in one sector of the economy will

likely result in some job loss in that sector, consumers will spend the resulting savings in other sectors of the

economy and hence increase the number of jobs in those other sectors. Of course, workers in some of the

poorest countries of the world who would otherwise have jobs producing textiles, would gain considerably if

the United States reduced its barriers to trade in textiles. That said, there are good reasons to be wary about

reducing barriers to trade. The 2012 and 2013 Bangladeshi fires in textile factories, which resulted in a

horrific loss of life, present complications that our simplified analysis in the chapter will not capture.

Realizing the compromises between nations that come about due to trade policy, many countries came

together in 1947 to form the General Agreement on Tariffs and Trade (GATT). (We’ll cover the GATT in more
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