The paper "Concept of Free Trade Agreement " is a good example of micro and macroeconomics coursework. The free trade agreement (FTA) is a treaty between two or more nations with a primary purpose of providing a free trade area, where trade and flow of the goods and services are conducted freely across their common boundaries without any hindrances or attracting tariffs. However, it is different from an ordinary market because there may be no free movement of the labor and capital. A uniform tax is imposed upon the trade with a non-member nation.
The United States got into its first FTA on 1st September 1985 with Israel, and since then, the U. S. has signed additional 14 FTAs covering a scope of around 19 nations (Baier & Bergstrand 2007). The U. S has received substantial benefits from the FTAs, and this has made the Commerce Chamber consider enacting more FTAs in future. Free trade agreements have raised productivity in the US, improved conditions necessary for creating jobs, boosted the economic growth and facilitated cross-border trade (Tsogas, 1999). While one tries to understand the advantages of FTAs, a piece of wider knowledge about the proposed Trans-Pacific Partnership (TPP) and the others such as TISA, and TTIP crosses one’ s mind to get a sharper focus. International trade defines the framework of prosperity.
New areas of innovation and competition are opened by the new free trade policies. Goods and services, as well as beliefs and values, are widely spread when the FTAs are established (Rosewarne 2014). Free trade agreement provides several benefits to organizations, employees, and stakeholders. The Pros of Free Trade Agreements: Increased economic growth; Increased production; Business incentives; Resource allocation; International cooperation; Lower government spending; Expertise; Better working environments; Foreign direct investment; and Transfer of technology. One great purpose of the trade is providing access to a wider variety of services and goods.
Scholars have said that when a free market is provided across borders, the competition is fostered significantly, thus forcing the companies to become more innovative and creative. Amid competition, better products are developed, and prices are kept low (Baier & Bergstrand 2007). Enterprises that deal with a lot of things at the same time are forced to close some subsidiaries so that they concentrate on the goods and services that do best.
International trade affects the quality of companies that still want to make sales in the free market. The free trade agreements benefit organizations in various ways (Brenton & Manchin 2003) A brand is easily created because every company is striving to produce quality products at unbeatable rates. Businesses can access a vast market at the same time thus growing considerably and becoming international companies by default. Free trade agreements require the companies and their employees to embrace and support the rule of law.
The World Trade Organizations oversee all the transactions, ensure the party members abide by the WTO rules and honor the contract. If a nation does not enforce the contracts, the businesses are lost, and the investors move their money to a more secure location (Tsogas 1999). The benefits of free trade are retained if all rules are obeyed. International cooperation is employed when free trade is implemented because the ideas and values are passed across the land.