Partnership of the Trans-Pacific

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Free trade is also described as the capacity for the trade of goods or services offered by buyers and salesmen from various countries without the intervention of the domestic government (Jagdish, 2004). It refers to economic policy that does not discriminate against imports from exports to foreign countries that have entered into an agreement. However, FTA governments do not simply remove all regulations on the taxation of imported and exported products and services, however much revenue may be lost in the process. In the political eye, the government cannot be in a position to do anything for free trade as it viewed as a policy covering any other policy concerning trade in the country. A good FTA has proven to among the best ways to broaden the foreign market to other exporters. Example opening foreign markets for the USA exporters (Destler, 2005).

The lowered trade hindrances that governments have put in place show the ability to foster an good investing environment for foreign countries and creating a more stable and transparent trading policy. It makes it cheaper for investors to come in and for the exports to cheaper to trade.

Free trade and the US was put under the FTA although it doesn’t genuinely have free trade with other countries as the fear of flooding in the manufacturing sector and the outsourced labour due to low wages reduces the chance of a steady growth in economy. Studies have shown in 2015, 47 % of US exporters made trades with countries they had signed an FTA. It also shows that merchandise in the US was exported to 20 FTA partners in agreement which resulted to a staggering $710 billion return revenue and the trade surplus in manufacturing totalling to $12 billion more (George, 2017). In this trade the countries that US had signed and FTA are Australia Bahrain Chile Columbia Israel Jordan Korea morocco, Oman, Peru, panama, Singapore, North America free trade agreement (NAFTA) which comprise of Canada and Mexico and DR-CAFTA (Costa Rica, El Salvador, Guatemala, Honduras, Dominican Republic, Nicaragua) (United-States & FAS, 1999).

The Trans Pacific partnership (TPP)

According to scholars the transpacific trade is often referred to as the largest regional trade record to be proposed where Canada stuck a deal with eleven other governments that would create free trade across the area reaching out to Japan from Chile through the Pacific Ocean (Bastiat & Mar, 2014). The TPP sector had managed to gain Australia Brunei, Chile, Canada, Japan, Malaysia, Peru, Singapore, USA, Vietnam, Mexico and New Zealand. It would create a region among 12 nations along the pacific which the governments in the partnership make up 40 % of the economic output of the world hence making it earn the name largest regional trade. In the TPP the US government and the world trade organization signed an FTA with the partners and the since Canada and Mexico have had privileges to access the USA, the two countries Canada and Mexico have rights that the USA which had to be reduced under the TPP (Jagdish, 2004).  It may include at the highest level having an agreement theta eliminates taxes on a wide range of products and services and setting out rules that help in resolving disputes. The current trade agreement dictates that the manufacturing industry has 62.5% of parts coming from North America and with the introduction of the TPP then Canada will meet the standard set at 45% of cost in relation to the parts made which in turn allows more exports (Kowalski, 2008).

Benefits of Free Trade

In international trading the framework of success is the plan and a good policies set up by the government to regulate trade. Free trade policies foster and open up new areas of economic drive that grows competition within investors and increases the sectors within the trade as well as innovation in manufactures and others. Through this Free trade spreads the value of sharing resources and promotes growth in the sector of goods and services exports for local governments. It values the beliefs and ethical business aspect especially if it relies on the traders keeping agreements (United-States & FAS, 1999). The relying on governments and companies makes the international trade environment to be more stable and accountability to each other is transparent. The section discussed the benefits that free trade bring to various areas.

To Organizations

Increased Production

The major reason of trade is to open up a wide range of resources to choose from that are in form of goods or services. Research carried out by organizations like the heritage foundation  have shown that free trade promotes competition impacting companies to become innovative and deliver better products while keeping the prices low and high quality standards. In a trading scenario the companies that are in countries with FTA a focus is given to goods and services that do best according to the revenue brought by exports and imports. It therefore increases the company’s market share by lowering the cost of production and the increased productivity leads to more effective rate of production (George, 2017). Organizations foster these FTA due to the information flow within the organizations as well as expansion to the regions becomes easier.

Incentives in business

Agreements foster change I the business environment and the FTA opens up foreign markets and promote business incentives as well as offer projections for the industry. The agreements may include rights to protect intellectual property and labour rights which open up the regions and manufactures to competition. They govern the standards that improve customs facilitation the improvement of custom facilitation and the environment standards are key to foster organizational growth and hence promote healthy competition (Jagdish, 2004). In global investment, allows a shared risk to be taken for greater diversification as finance sector and trade are equally in agreement in the issue of exporters using more complex technology create more jobs and better wages.

International cooperation

Free trade governs companies in abiding by the rule of law which they must support in their operations (Bastiat & Mar, 2014). In the organization the benefit of the relations is promotion of investor opportunities in the country. Most investors will seek to perform trade actions according to the World trade organization that requires members the respect and honour the rulings made, and that’s why they inline on investing in countries where companies follow the rule of law.

Resources acquisition

Global resources are streamlined in the allocation by governments and improved by free trade. Organizations have found out that countries that have free trade agreements foster resources acquisition at lowered tax or no tax at all. The Resources end up benefiting both countries and according to CATO institute the benefit from reduced price rates on imports increase the availability of resources to available organizations and companies that are open to trade (Jagdish, 2004).

Access to new markets

FTA has brought about the ability of organizations to access and broaden the reach of their products. The FTA opens up markets for foreign and exporters to sell products in the comfort of the business laws and rules. In return the new market brings diversification of products and healthy competition is achieved.

To Employees.

Increased wages and salaries

Companies that employ people for the production have to increase the wages earned by their workers in order to keep the production efficient (Destler, 2005). With more work in production the company earns more with reduced cost in resources acquisition and therefore has to increase the wages for proper living standards of their workers.

Creation of employment opportunities

For employees with skills in the export business will get a better pay with the introduction of technology. Organizations that expand their business to the FTA partners create an employment opportunities for people (Bastiat & Mar, 2014). The created jobs in the sector will increase due to the companies diversifying to the foreign nations.

To stakeholders

Investor’s capital inflow

High levels of investment capital brought by the foreign investors build the organizations stakeholders in the sector. Most agreements reduce the friction of potential investors coming in to grow the economy. With new resource and capital flowing into a country especially developing, is faced with an upward productivity curve for the growth of the economy. Stakeholders benefit from it all and the banking system is stimulated affecting the currency exchange rate lowering leading to more investment opportunities in the future.

Challenges Facing Organization in Business Environment

Organizations and Businesses have challenges that they faces in today’s economy where everyone wants to earn more profits to keep up with the high living standards. Introduction of FTA has made the companies and the businesses faces a better chances of competing effectively in the business world (Kowalski, 2008). Due to avoidance of important information in the business world both the employer and employee succumb to the pressures of the environment. Business failure can occur when lack of trust between companies that do not abide by the rule of law and hence promotes lack of fair competition.

Problem Solving and Risk Management.

Identifying, assessing, and mitigating risks is one of the greatest challenges in business. The lack of a sophisticated problem -solving leads to the inability to adequately deal with risks facing businesses (Destler, 2005). Companies should know that problem solving is the key to trade, and develop problem-solving capability mechanisms with the knowledge, of businesses should look for strategy to identify risks, and will employ the problem solving skills and get the best way to mitigate them.

Foreign Marketing and Customer Loyalty

Foreign markets are sometimes unpredictable and that’s why marketing to potential customers effectively should be carried out. It is also a major con of retaining your existing customers as a loyal trader in the business environment (Bastiat & Mar, 2014). Having the right marketing channels is key for businesses to be successful in the future. Identifying what your customers want is vital and should be fostered to avoid them from leaving. A lack of a good marketing strategy and retaining of customer loyalty ruins the growth of a business.

Market Uncertainty

Economic struggles encountered globally lead to uncertainty today than in the past. Due to this uncertainty, short-term planning becomes diverse hence diminishing the long term planning in business (Jagdish, 2004). Everyone and especially business leaders have a great fear to uncertainty. Organizations may find it right to venture into short term planning but  fail to strategically generate a long term plan for the future as it can change. Most organizations have to plan for the core long term goals and focus on the key principles shifts of the market to adjust accordingly.

References

Bastiat, F. & Mar, A. D., 2014. What is free trade? : an adaptation of Frederic Bastiat's "Sophismes economiques". Garfield Heights: Duke Classics, .

Destler, M., 2005. American Trade Politics. Washington, D.C: Institute for International Economics,.

George, H., 2017. Protection or Free Trade. New York: Read Books Ltd.

Jagdish, B., 2004. In Defense of Globalization. Oxford: Oxford University Press.

Kowalski, K. M., 2008. Free Trade. Tarrytown, NY: Marshall Cavendish Benchmark.

United-States & FAS, 1999. The North American Free Trade Agreement.. Washington, D.C: Foreign Agricultural Service.

 

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