International Business Unit V Essay

Danielle DeLille

Columbia Southern University

International Business

Dr. Ademola

October 10, 2016

1. The bilateral agreement has enabled China and South Korea an increase in trade deficit for the United States; what are the advantages and disadvantages for the United States to continue these relationships with the bi-lateral agreement?

        According to our text, bilateral integration is when “two countries decide to cooperate more closely together, usually in the form of tariff reductions.” (Daniels, p. 262) The United States has engaged in multiple trade agreements with countries all over the world.  The United States has agreements with China and with South Korea as well as several other countries, these agreements allow trade between the countries to be more cost effective and eases tension between the lands regarding the transporting of goods across international waters.  China and South Korea have a large amount of trade between the two countries which allows for a trade deficit for the United States.  Some may argue that this would be the time for the United States to cut all trade lines with these two countries, however that is really not the best option for the United States at this time.  The United States trades with countries all over the world and in reality, cutting ties with one of our biggest trade partners would only hurt our economy even more as well as our relationships with South Korea, China and potentially other countries.  In fact, many smaller countries actually trade with the United States as well, the trade is from both countries and both countries benefit greatly.  The United States receives several traded goods from other countries as well and cutting those trade lines could potentially affect everyone one some level.  Even if a person only buys products made in the USA, that doesn’t mean some of the parts of that product are not traded goods, it only means that the product, in and of itself is made in the United States.   The United States not only incurs a trade deficit from South Korea and China but our Country also benefits from these trades as well.  Cutting trade lines would overall be a poor decision for the United States due to the broad repercussions that decision would entice from other countries we currently have trade agreements with. There are a vast array of ways each country would benefit from a bilateral trade agreement. For China, the agreement would “allow high-quality American products to be more accessible to Chinese consumers, Help China re-balance its economy to focus more on consumption by household rather than relying on fixed assets, and Allow Chinese industries to gain more exposure to American companies, helping them transition into more innovation industries that pay higher wages.” (Coalition of Service Industries, 2016)  The United States would benefit in a way that would allow “the American investors to receive national treatment in the Chinese market and gain more access to Chinese consumers. (Coalition of Service Industries, 2016).  All countries would definitely benefit from these treaties in multiple ways.