Eastern Region- Analyze the role of regional integration ( NAFTA, EU, APEC, ASEAN, CAFTA, etc.) Compare and contrast the economic development stages of countries within the chosen region and the ramifications of the region's economic development for global business.© BrainMass Inc. brainmass.com October 1, 2020, 7:47 pm ad1c9bdddf
Establishment of trade zones like European Union and NAFTA have enabled countries to cooperate more with each other, take advantage of each other's strengths, and promote international trade volumes. Technology transfers between countries have enabled countries to enforce standards like ISO: 9000 etc. Policies like carbon credits, which are being used by countries worldwide to benefit by decreasing pollution, is being made possible by bilateral trade agreements between countries.
ROLE OF NAFTA (Regional integration) IN PROMOTING Trade in North America
NAFTA is a comprehensive agreement to liberalize trade in goods and services, remove barriers to investment, strengthen the protection of intellectual property rights; and establish a framework for further trilateral cooperation. The major provisions can be summarized in terms of two broad principles that cover virtually every aspect of trade among its three members:
Non-discriminatory treatment and transparency provide the certainty and predictability that are a prerequisite of any significant expansion of business.
The member countries of the North American Free Trade Agreement (NAFTA) form the world's largest trading bloc, with a gross domestic product (GDP) of US$11.4 trillion, or one third of the world's total GDP.
ACHIEVEMENT OF NAFTA
(BENEFITS TO US AND OTHER NAFTA COUNTRIES)
The achievement of the NAFTA is the permanent elimination of all tariffs among the three partners according to a phase-out schedule that lasts 15 years, that is by 2008. However, only the most sensitive products are subject to a long phase-out. All bilateral tariffs between the United States and Canada were finally eliminated in 1998. With regard to U.S.-Mexican trade, more than half of both U.S. and Mexican exports to each other became duty-free at NAFTA's entry into force in 1994; Today, 99% of these products are now duty-free.
Lower tariffs mean that families pay less for the products they buy and have a greater selection of goods and services, which increases their standard of living.
Both households and businesses benefited as tariff cuts on NAFTA imports helped to moderate prices. Consumers have had more choices at lower prices, especially on products of greatest importance to many families' budgets, such as clothing, food and household appliances. And businesses experienced a greater supply of inputs at lower prices, enabling them to be more competitive globally.
Trade among the three NAFTA nations expanded quickly, more than doubling between 1993 and 2002. At the end of last year, U.S. two-way trade (merchandise exports plus imports) with its NAFTA partners amounted to more than $600 billion, or about $1.6 billion each day. Trade growth was particularly strong between the U.S. and Mexico, almost tripling from $81 billion in 1993 to $232 billion in 2002. Mexico has edged out Japan as the United States' second largest trading partner after Canada. Canada and Mexico together take 37% of all world-wide US exports and supply 30% of all US imports.
NAFTA fosters the confidence required to make long-term investments and partnering commitments. In 2001, the latest year for which comprehensive UN data are available, the total inflow of foreign direct investment into North America amounted to $152 billion, almost triple the amount that flowed into the area in the pre-NAFTA year of 1993.
The dynamic performance of exports and investment has contributed to creating more and better paying jobs in all three countries.
The North American Free Trade Agreement (NAFTA) eliminated 766,030 actual and potential U.S. jobs between 1994 and 2000 because of the rapid growth in the net U.S. export deficit with Mexico and Canada. The loss of these real and potential jobs is just the most visible tip of NAFTA's impact on the U.S. economy.
In fact, NAFTA has also contributed to rising income inequality, suppressed real wages for production workers, weakened collective bargaining powers and ability to organize unions, and reduced fringe benefits.
Unemployment, however, began to rise early in 2001, and, if job growth dries up in the near future, the underlying problems caused by U.S. trade patterns will become much more apparent, especially in the manufacturing sector. The U.S. manufacturing sector has already lost 759,000 jobs since April 1998 (Bernstein 2001). If, as expected, U.S. trade deficits continue to rise with Mexico and Canada while job creation slows, then the job losses suffered by U.S. workers will be much larger and more apparent than if U.S. NAFTA trade were balanced or in surplus.
Growing trade deficits and job losses
NAFTA supporters have frequently touted the benefits of exports while remaining silent on the impacts of rapid import growth (Scott 2000). But any evaluation of the impact of trade on the domestic economy must include both imports and exports. If the United States exports 1,000 cars to Mexico, many American workers are employed in their production. If, however, the U.S. imports 1,000 foreign-made cars rather than building them domestically, then a similar number of Americans who would have otherwise been employed in the auto industry will have to find other work. Ignoring imports and counting only exports is like trying to balance a checkbook by counting only deposits but not withdrawals.
NAFTA has also contributed to growing income inequality and to the declining wages of U.S. production workers, who make up about 70% of the workforce.
The growth in U.S. trade and trade deficits has put downward pressure on the wages of "unskilled" (i.e., non-college-educated) workers in the U.S., especially those with no more than a high school degree. This group represents 72.7% of the total U.S. workforce and includes most middle- and low-wage workers. These U.S. workers bear the brunt of the costs and pressures of globalization (Mishel et al. 2001, 157, 172-79).
A large and growing body of research has demonstrated that expanding trade has reduced the price of import-competing products and thus reduced the real wages of workers engaged in producing those goods. Trade, however, is also expected to increase the wages of the workers producing exports, but growing ...
The solution compares and contrasts the economic development stages of countries within the chosen region and the ramification of the regions economic development for a global business.