These partnerships, called strategic alliances, allow American companies to gain access to, and to benefit from, the new manufacturing, marketing, and distributing techniques that are being developed overseas. In the late 1980s, for example, Japan had achieved a commanding lead in the production of circuitry for such products as laptop computers. American firms responded by seeking partnerships with various Japanese firms involved in that production. As a result, those American firms gained firsthand experience in the production of faster and smaller electronic components. This development helped save the U.S. semiconductor industry from bankruptcy.
Free trade increases the size of markets.
Thus, as demand for U.S. products overseas increases, so does American production needed to meet this demand. This allows American firms to hire more workers, pay higher wages, and invest more money in research and development of new products. Trade barriers overseas affect U.S. firms in the same way shutting the doors to the California market would affect a firm in New York. Free trade expands an American company's market, and this in turn expands sales and provides increased capital for that company's future production needs. Free trade appears to produce global economic prosperity.