Essays on Reasons for Signing a Free Trade Agreement Case Study

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The paper "Reasons for Signing a Free Trade Agreement " is a perfect example of a business case study.   A Free Trade Agreement (FTA) is an agreement signed by two or more countries within a trade bloc or a free trade area. This type of agreement enhances trade between the countries by increasing the trade of goods and services between them and reducing the trade barriers (Department of Foreign Affairs and Trade 2012), such as trade quotas and tariffs. Some FTAs have additionally created a free border, meaning that the citizens of the countries are also able to move freely between the two or more countries.

Free Trade Agreements also help to protect the local markets and industries (Grimson, 2014). The implementation of the Free Trade Agreement (FTA) allows unrestricted commodity exchange and trade among the two countries (Sheppard, 2005). The global business environment is extremely dynamic in the 21st Century. For this reason, it is very important for countries to cooperate with each other in order to stay afloat and successful. Cross country trade is beneficial both to the businesses and the consumers.

For the businesses, it increases their customer base, and by default, their profits. It also enables the interaction of businesses and the subsequent trade of business methods and secrets. For the consumers, cross country trade provides a variety of goods and services to choose from (Mendoza & Bahadur, 2002). It also exposes them to new products and experiences. It further ensures that there is healthy competition between businesses, and this ensures reasonable prices for the customers/clients. Reasons for signing an FTA Countries sign FTAs for a whole range of reasons. First, FTAs cover intellectual property rights.

These are laws that protect the monopoly of an individual’ s intellect. This includes patents industrial design rights and copyright. Intellectual property rights cover all forms of artistic work, like literature and music. They ensure that the individual who initially came up with an idea (inventions or discoveries) owns it exclusively, so that no other person, company or organisation can “ steal” the idea or get false credit for it. It is important to protect intellectual property rights in international business to avoid conflict between businesses, or countries in general. Free Trade Agreements also take care of government procurement, also called public procurement.

Government procurement is when an authority procures, or annexes, goods or services on behalf of a public authority. This, sometimes, maybe done by the procuring authority issuing public tenders. Free Trade Agreements ensure that government procurement is monitored relatively closely. International business can be rather delicate, and lack of regulation undermines the whole point of FTAs by increasing the trade barriers between countries. Monitoring public procurement prevents corruption and fraud in the course of international business. A country would also sign an FTA to have a good competition policy with the country with which it partners.

Having a secure competition policy ensures that the competition between the two or more trading countries does not get hostile or undermine the trade. This controls the prices of goods and services as they are traded between the partner companies. This prevents the businesses in the countries from lowering or raising their prices such that it undermines the market for the businesses in the other countries. This way, a country can participate in international trade while simultaneously retaining a good market for its local businesses.


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Sheppard, E. (2005). Constructing free trade: from Manchester boosterism to global management. Transactions of the Institute of British Geographers, 30(2), 151-172.

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