Running Head: PROS AND CONS OF FREE TRADE AGREEMENTS 1
Pros and Cons of Free Trade Agreements
PROS AND CONS OF FREE TRADE AGREEMENTS 2
Abstract
Countries from all over the world have been trying to improve competitive enhancements by joining together their economies to make a greater cost-effective production or services that is associated with the free trade agreements with exclusive markets. The definition of a free trade agreement is that it is a designated group of countries that agreed to eliminate tariffs, quotas and preferences on most goods between them. Countries usually choose this form of agreement when they are complementary, not competitive. The aim of a free trade agreement is to reduce barriers to ease the exchange, so that trade can grow as a result of specialization, division of labor, and most importantly via comparative advantage. The idea also explains that the outcome will be an increase in income, wealth and well-being for everyone involved by the free trade agreement. FTAs are interesting, especially for countries that are complementary, because the aim is to increase imports and exports between the two countries at a lower price. This does not work for competitive countries that produce the same products. FTAs aim at giving access to other markets. Countries export their products and they import products they cannot produce themselves or at a higher price. Here we can see the pros and cons of some agreements as follows.
PROS AND CONS OF FREE TRADE AGREEMENTS 3 Asean Free Trade Area (AFTA)
Name of agreement | Countries involved | Date agreement implemented | Pros of agreement | Cons of agreement |
Asean Free Trade Area (AFTA) | Brunei, Indonesia, Malaysia, Philippines, Singapore, and Thailand (Original signers). Vietnam...