Hi guys. Welcome back to Global Business Environment. This is going to be module six, in which we're going to answer another key question about the global business environment. This time we'll be talking about free trade, and asking if it's really free, or if it's freer trade, or if it's even managed trade across the world today. What do we mean by this? Let me show you, a little graph or chart here to see if we can shed some light on what I mean by that. This is, a chart that shows, entire world trade and this information is coming from the World Bank and the IMF. And, it's, it's since 1990, which is part of the period where we've seen this enormous drop in tariff rates. So the average tariff rate across the world since 1990 has dropped from 25% approximately, to less than 10%, as demonstrated by this red line and this scale on this side of the graph. So, you might ask yourself, if it's true that there are these great gains from trade like Smith and Ricardo showed us in the last module, why don't countries embrace it completely? Why don't they just, put their tariff rates at zero, and the world just, trades freely and whatever their, comparative advantage might be in, or absolute advantage, whatever the case may be. The truth is the world operates not in pure free trade, but better said in, in some form of freer trade or managed trade. Now this is great, the tariff rate has dropped, but if you were going to go to a world where we had completely free trade, you'd expect it to go all the way down to zero. And as we've seen before, the world has prospered as world trade volume has increased, and there does seem to be a correlation as tariff rates have gone down. We see this increase in imports and exports across the world. And it's been a prosperous time in general for the world, as the world's gross domestic product has increased as well. And this is more pronounced, as we've seen before, when we look at trade from the emerging markets of the world, or the developing economies. We see these the trade exploding here this blue line, the developing economies, and we see in this other graph which is a red line on this one, this enormous drop in tariff rates since 1980. You can see that the developing countries started out at higher tariff rates and those countries have had the most significant drop or changed with policy decisions, their tariff rates to the largest degree. And that's correlated with this increase in trade from and into these developing countries. And so the reason I point this out is to some degree, when you watch the news, or read, articles, you may, see information which seems to show that the emerging markets or developing world have somehow not participated in, in the enormous boom in world trade, or perhaps have had a very open border for long periods of time. As we see, starting in 1980, this drop has occurred, which means they were at very high rates. At the same time, the developing world had inter, tariff rates in the 30s. The average developed market had an in, a tariff rate in the teens. So their tariff rates were more than double and so, this policy change has had a major impact on the world, and allowed the developing markets to participate. But as we're seeing these rates remain relatively high in the sense that they're not zero. And so we're going to try to find out what's going on here with a world where we have declining, but still existing tariff rates. What does that mean? How, how are, how is trade administered in today's modern world? So, we're going to develop that in this module throughout several parts. And in the next, part of this module, we'll talk specifically about regional trade agreements and free trade agreements, a relatively new development in the world over the past 60 or so years. So thank you very much. We'll see you back next time.