What Type of Regional Trade Agreement Do You Think Would Most Inhibit Your Global Expansion Desires? Why Do You Think So?

As the CEO of a multinational corporation that desires to expand its global market share in a highly competitive industry, I think regional Free Trade Agreement (FTA) would most inhibit my global expansion desires. A free trade agreement is an agreement between the countries party to remove trade barriers such as tariffs and import quotas. Free Trade Agreements are recognized by the World Trade Organization officially written in the “General Agreement on Trade in Services”, and are exempted from the most favored nation rule. Regional trade agreement is the collective term used by the World Trade Organization to refer to Free Trade Agreements and other regional preferential trading arrangements. Some of the most known successful FTAs are Association of Southeast Asian Nations (ASEAN) Free Trade Area (AFTA) (1992), North American Free Trade Agreement (NAFTA) (1994), European Economic Community (EEC) to European Union (EU), and the Southern Common Market (MERCOSUR).

Free Trade Agreements between countries are getting bigger. The EU is a good example, as the original 6 members have been joined by others and membership currently stands at 15. The 3 newest members joined in 1995, but as 13 countries have applied for EU membership, mainly from Eastern Europe, the EU will expand even further. The EU has already begun as a customs union and evolved into an economic integration, which indeed will certainly increase the overall performance of all the MNCs of that region. The increase in free trade agreements between countries are not necessarily in close proximity. Traditionally, regional trade agreements were between countries geographically close such as the members of the EU and NAFTA. More recently, however, geographically distant countries, such as the United States (US) and Jordan, Chile and Canada, and Singapore and New Zealand, have entered into integration arrangements. In a close view from the order of looser to stronger integration, there are: