Free Trade Association of the Americans

Free Trade Association of the Americans

FreeTrade Association of the Americans

CourseInstructor

Thefree trade agreement with Americans was an economic integrationeffort that was born in 1994 by the countries of the westernhemisphere. Like any other economic integration in the world like theEuropean Union, FTAA was aimed at achieving the highest economicbenefit by consolidating their economic terms within themselves andoutside the region. The association set various objectives it aimedat achieving. Its primary intention was to improve prosperity througheconomic integration and promotion of free trade. The integrationalso aimed at establishing a free trading area by eliminating anytrade and border barrier and other restrictions established by themember countries. Increasing and maximizing openness in the marketwas also a clearly stated goal of the association. Also, FTAA aimedat promoting minor integration within the broader integration tostreamline economic policies within the region. The integration alsoaimed at liberalization of policies and environmental programs thatare mutually supportive. Last but not least, the association aimed atsecuring observance, protection and promotion of workers right withinthe region. The association main aim was to promote and harmonizeeconomic terms within the region in order to compete appropriatelywith other regions like the people Republic of China and the EuropeanUnion that has a commanding population, thus, market potential (Ahn,2003).

Everythinghas two sides as is the case with a coin. On the one side, FTAA aimsat accomplishing a major milestone in improving the life and economicconditions of the area. However, no matter how something looks good,it has some faults associated with it. With the implementation ofFTAA agreement, there are some people who are against the idea citingvarious reasons for their opposition. The first group is aboutspeculation and pessimism because they are for status quo. Risk isnot an option for them because the future is never certain. Fear ofwhat may culminate is what they aim at avoiding. Unionization ofworkers and their federation would be limited because the corporationwould threaten to relocate to low wage areas. The association, inthis case, is thought to be limiting the right of workers. Theassociation would lead to loss of jobs for certain countries.

Forinstance, if the economic barriers are eliminated, major companieslocated in the United States will relocate further south where therate of wages is high. Smaller and growing companies in lessdeveloped countries are likely to shut down due to multinationalsfierce competition. Large multinationals and corporation are alsosuspected to direct environment policies instead of the citizens.Subsidies to small producers would be restricted in the name of faircompetition and, in that case, small producers will collapsefollowing unmatched competition level from corporations. Some membercountries also claim that only developed and large member countrieslike the United States and Canada are poised to benefit from thisassociation. Terms of trade for low-wage countries is likely toworsen because the fierce competition will increase debt between theUnited States and its trading partners. Some of these problems can beeliminated while others are impossible (Alca-ftaa.org,2015).

Inmy opinion, FTAA will improve the living standards of small countrieslike Ecuador and Niagara. These are among the countries with low wagerates in the region. In effect, large corporations from developedcountries like Canada and the United States would relocate to theseareas in need for a lower cost of production. This is an increase inemployment opportunities. The corporation would also forcedevelopment of infrastructure and other aids to trade in thesecountries. Employment and improvement in infrastructure would improvethe living standards in these countries. People will also have accessto cheaper goods and service and, therefore, use the extra income inacquiring other needs.

Largemultinational have an economic benefit of large scale production and,hence, smaller companies cannot effectively compete with them. Membercountries would have to protect smaller local investors from thefierce competition from these corporations. They would be givensubsidies and tax exceptions by the government to reduce their costof production. The government can also set higher corporation taxlevel for multinationals to discourage them from setting up plants inthese countries and also increase their cost of production. Thesmaller companies would then have to establish themselves andstrategically establish themselves in the market and compete with themultinationals. The government would encourage entrepreneurship andlocal consumption (Nogués,2003).

Sub-regionaltrading blocs are significant negotiating unit with larger countries.When these sub-regional blocs of smaller nations are established withharmonized economic policies, large and developed countries wouldview these nations as a single and significant trading partner. Thesub-block has a higher population and market potential, and largercountries would have no option but to proceed with caution in anyassociation they intend to form. Sub-blocs increase the negotiationpower because they have large value they are offering, and this makesthem be at par with larger countries.

Ithink small nations should also participate in a trade agreement withlarge nations. Although, on the larger nation`s perspective, thesmaller nation may be of fewer perceived benefits, all parties arelikely to benefit. The Smaller nation would be in a position tomarket its product in the larger countries since the trade barriersare likely to be abolished. Potential benefits also include thecreation of employment opportunities emanating from corporationssetting plants in these small nations. Despite the jobs, the smallernation would be open to major development and association in othersectors of the economy including security and defense (PaivaAbreu, 2006).

Regionaltrade agreements increase Cooperation between the member states.Economic aspects are the primary of all the other objectives pursuedby many countries. Trade association and agreement are increased byregional trade corporation. A successful economic integration alsoleads to the need for political association. However, due to thediverse difference in economic development among the member states,many of these associations fail due to the perceiving effect that thecorporation is beneficial to a few nations. Altogether, many regionaltrade agreements have increased corporation all over the world.

Afterthe extensive reading I have made about FTAA and regional tradeagreements, in general, I would suggest that they should continue toexist. The benefits associated with regionalism and forming blocks ishuge. There would be an increase in the potential market for goodsand services. Acquisition of goods and services would be lower thatwhen the member countries traded independently. The regions alsoincrease cooperation, peace, and unity. Despite the fact that someproblems are associated with a regional trade association, thebenefits are far much better. Everything good has its fault, asearlier indicated and regional trade cooperations is not anexception. So, regional trade agreements and their progress to thatshould persist to foster development in the region (Vizentini&amp Wiesebron, 2004).

References

Ahn,C. (2003). Shafted.Oakland, Calif.: Food First Books.

Alca-ftaa.org,.(2015). ALCA- FTAA – ZLEA – Official Website of the Free Trade Area of theAmericas Process (FTAA).Retrieved 21 September 2015, from http://www.alca-ftaa.org/alca_e.asp

Nogués,J. (2003). Reciprocityin the FTAA.Buenos Aires: Institute for the Integration of Latin America and theCaribbean IDB-INTAL.

PaivaAbreu, M. (2006). TheFTAA and the political economy of protection in Brazil and the US.Buenos Aires: Institute for the Integration of Latin America and theCaribbean.

Vizentini,P., &amp Wiesebron, M. (2004). Freetrade for the Americas?.London: Zed Books.