The paper 'The Effect of Free Trade Agreement: South Korea, USA' is a great example of a Macro and Microeconomics Case Study. The trade agreement between South Korea and the United States is an agreement signed on June 30th, 2007, and came into enforcement on March 15th, 2012. The agreement is also referred to as KORUS FTA. It is the first United States free trade treaty with a powerful Asian nation and the second-largest treaty be made by South Korea The primary objective of the agreement was to promote trade among the two countries bearing in mind the significant advantages that come with the business.
Such benefits include increased economic growth in the countries involved, enlargement of the market for the participants, and an increased profit for the traders which consequently lead to a rise in their standards. The agreement includes around 362 million customers from the two countries which clearly shows how vast the market is for traders. The provision in the agreement allows the elimination of 95% of each state’ s levy on traded goods for five years meaning traders are charged less thereby making more a higher profit.
It also creates provisions for some multinational financial services. However, the effects of the treaty show otherwise as discussed in this paper; there are both some positive effects and adverse effects as well. A few areas in these two countries will be selected, and the effect of this free trade agreement be speculated. Four years after the agreement, the trade deficit which was there has swelled by 99% which is about 15.4 billion. This is quite an enormous effect on the business.
Before the agreement, the trade between the two countries was restricted, and still business between the two countries was still doing well. One of the main provisions of the treaty was to provide free trade among the two stations with few restrictions something different from what used to happen before. The expectations were that when there are few restrictions on trade across different nations, the trade usually flourishes because people see it less tedious regarding having to follow many legal procedures and cheap since when there are certain procedures to follow, there must be paid for them.
Many restrictions usually deter many potential entrepreneurs in many ways including lack of enough capital to pay for all legal procedures which they must adhere to.
Work citedSubhasisswain. Has the KORUS free trade agreement lived up to its expectations? US-KOREA free trade agreement: pros, cons, and effects. Word Press, 2014.