03 Jul Business Assignment 6
150 words or more
APA format
3 scholar references
In cite citation
Response 1
Key Term and Why You Are Interested in It
Free Trade Area interest me because right now our country is going to have to decide which route will be taken in dealing with our current agreement with Canada and Mexico. Lately the NAFTA agreement has been a hot topic on every news developing cite since our new President Donald Trump taking office. President Trump has publicly mentioned that he will be bring jobs back to America by keeping big businesses from crossing borders in order to find cheaper labor. However, by doing this our nation will force other nations to lose jobs which will hurt their economy. On the other hand, other nations have the power to raise tariffs and quotas forcing the United States to pay a higher tax on importing goods.
Explanation of the Key Term
The Free Trade Area is defined as preferential trade area where tariffs, quotas, and preferences on most (if not all) goods among members are removed, and each member can determine its own trade polices with nonmembers.(Satterlee, 2015, p.184) Any nation around the world can get involved in establishing a Free Trade Area with another if they are in good relations. The United States, Canada, and Mexico established NAFTA in 1994 making trade easier and setting up agreements to where each of them improves their economy. A big reason for establishing free trade is to improve relations in order to protect the interest of certain products.
Major Article Summary
The article I chose to discuss deals with NAFTA and its accomplishments over the years due to free trade. Canada has increased their GDP per cent growth to sixty-six bringing in around 312.1 billion dollars since 1993. Free Trade Areas have contributed to economic growth, job growth, and investment growth because nations agree on their own prices for products making it more affordable. Due to the new desires from our current president Mexico is going to feel the worst out of what the United States will change in our Free Trade agreements.
The Mexican government has told reporters it will begin a 90-day consultation with the country’s Senate and private sector about NAFTA.(Malkin, 2017) President Trump has threatened to pull out of NAFTA with thoughts being it is the worst deal ever approved. Each country has benefited from this Free Trade but The United States feel there has been a lot of money and jobs left on the table. Nations decide to enter a Free Trade Agreement to protect their interest in certain products while keeping good relations. With their being talks about Mexico possibly being forced into paying for a wall on the border, relationships are starting to crumble.
Taxes on products will start to rise again and jobs will most likely start to slow down for each of the three countries involved. Under the U.S. Trade Promotion Authority laws, the White House must inform Congress at least 90 days before any new trade agreement is signed.(Malkin, 2017) President Trump has not been in office for 90 days yet so Mexico is going to use this time to rethink their options. This Free Trade Agreement has turned Mexico into a manufacturing powerhouse over the past years which makes them want to keep good relations in all areas.
Discussion
Free Trade Area’s are important to every nation that wants to keep relations stable in order to keep out of possible confrontation. It is a way for two nations like Canada to improve their identity in terms of workforce and economy.Both chapter five and six contain a lot of key terms that have some relation to Free Trade Area. Nations who get involved with Free Trade Area’s also establish allies who will be willing to back them in confrontation in order to maintain security in their interest. Every day you can look on news developing cites and see how weaker nations with valuable resources are getting involved with more powerful nations or territories. The way our government decides to negotiate Free Trade will determine how America is going to thrive or take a step back. Americas workforce is currently growing due to good relations but making other nations mad will only cause a setback.
This article relates to my first citation because it also deals with Free Trade. The Isreal Free Trade Agreement (ILFTA) is an Agreement with our country giving passage to a free merchandise processing fee. Almost all goods from Israel are eligible for ILFTA preference, it just has to meet a 35 percent direct cost rule. Another cited reference is about Australia and nations who operate a Free Trade Area with them.Australia has established FTA’s with individual countries and groups with its newest members being China, Japan, Korea, and Trans-Pacific Partnership countries. The third cite reference discusses an FTA that was established in 2004 between the United States and Chile. It highlights major areas that will thrive from this deal like access to a fast growing Chilean Services Market. My final cited reference gives a brief summary of the three-way trade agreement between Canada, Mexico, and United States and also shows a graph of how much each nation has been benefiting from each other.
Response 2
I am interested in The World Bank because I want to satisfy my own curiosity/ignorance, I have heard the term thrown around as far as bailing out countries such as Azerbaijan who is requesting to barrow $4 Billion from International Monetary Fund and the World Bank and Nigeria who is requesting to barrow $3.5 billion from the World Bank and the African Development Bank due to the declining oil prices the economy of these two oil producing countries. Also I am interested in the investments that The World Bank makes to develop private equity and venture capital ecosystems, sovereign wealth funds, and strategic investment funds.
Explanation of the Key Term
Investopedia defines The World Bank as, “an international organization dedicated to providing financing, advice and research to developing nations to aid their economic advancement. The World Bank was created out of the Bretton Woods agreement as a result of many European and Asian countries needing financing to fund reconstruction efforts. As of 2016, the Bank predominantly acts as an organization that attempts to fight poverty by offering developmental assistance to middle- and poor-income countries” (Investopedia, 2017). The World Bank is divided into five cooperative institutional organizations, “International Bank for Reconstruction and Development (IBRD), International Development Association (IDA), International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA), and International Centre for Settlement of Investment Disputes (ICSID)” (Investopedia, 2017).
Major Article Summary
This article links the progression of philosophies of the United Nations and World Bank by placing them on the left-right political spectrum. The left-right political spectrum is a method of examining individual or group beliefs to determine if they are left wing favoring liberty or right wing favoring authority. “When liberties are applied equally and/or benefit all, it is ‘collective liberty’. When liberties benefit some more than others, or when they benefit smaller groups more than bigger groups, it is ‘individual liberty’. Likewise, when the whole group exerts its authority, it is ‘collective authority’, and when ‘the one’ or the ‘few do’ it is ‘individual authority’” (DeMichele, 2016). Within in this article the authors access previous philosophical assessments of both organizations additionally applying both qualitative and quantitative content study of annual World Development Reports that is published by the World Bank and Human Development Reports which is issued by the United Nations Development Programme to inspect their development dissertation. Breakdown of fifty-seven reports from 1978 to 2011 uncovers two major outcomes. First, the World Development Reports have constantly expressed a growth of dissertation to the right of Human Development Reports. Secondly, there is unequivocal confirmation of coming together in the reports over time near the political center (O’Dell, 2013).
Even though both the World Bank and the United Nations were originally designed to be nonpolitical entities both show apparent philosophical commitments (O’Dell, 2013). “The World Bank has continued to promote the private sector and a growth-centered approach to development as expressed in its World Development Reports” (O’Dell, 2013). This article concluded that The World Bank and United Nations Development Programme are both organizations that continue to learn from a wide array of sources including each other (O’Dell, 2013). To which for following are important task to conduct in future research, “sort out the ultimate origins of institutional differences and transformations in international organization ideology, which may involve sources of upstream funding from member states, shifts in governing boards and operational structures, or even differences in the scholarly approaches that conceptualize and evaluate development policies” (O’Dell, 2013).
Discussion
a.
It is important for us to understand the political beliefs of The World Bank so we can understand why they make the decisions they make i.e. bailing out countries or why they make the investments they decide to make. Also we must understand the goals of The World Bank which are to end extreme poverty and increase the overall prosperity by increasing the income of the bottom 40% of the world’s population (Investopedia, 2017). In our world where our economies are becoming more and more intertwined us understanding where and how The World Bank will step in to help can have a determination on what markets we invest our in. To another end The World Bank also offers low interest loans, zero interest credits and grants, for qualifying individuals and governments. Understanding which countries and individuals have received loans from The World Bank can give us an indication of their economic standing and if investing in those organizations is advantageous.
b.
In Natenson, 2015, the author discusses how Guiding Principles on Business and Human Rights which was adopted by The United Nations Human Rights Council in 2011 affects The World Bank (Natenson, 2015). Under the Guiding Principles, the World Bank is obliged to create adequate access to effective non-judicial solutions for those injured or harmed by the ventures that they financially back. As of now The World Bank has two mechanism to achieve these goals the Inspection Panel for public sector lending and the Compliance Advisor Ombudsman for private sector lending.
Goldfrank, 2012 addresses the controversy of the World Bank’s role in the advancement of participatory budgeting. Participatory budgeting (PB) is, “is a decision-making process through which citizens deliberate and negotiate over the distribution of public resources” (Boutall, 2017). The article focuses on six main points, one the originators of participatory budgeting, the Workers’ Party in Brazil, is no longer promoting participatory budgeting, two the World Bank has become the most active promoter of participatory budgeting, three within the Bank, some promote PB as part of its fairly standard pro-market agenda, while others share many of the same goals as PB’s originators, four the Bank has become very important for the diffusion of PB, five the Bank has little influence over the eventual outcomes of PB in different countries because it has little or no control over many of the factors that affect PB in practice, and six because PB’s effects have strong potential to be positive (Goldfrank, 2012).
Response 3
The Common Market was selected as a key term because of the influence globalization has had on the integration of trade between countries. Many politicians and citizens desire to remove barriers to global and regional trade, which would provide increased opportunities to form common markets. Countries in vicinity to the United States, such as Canada and Mexico, provide viable opportunities for more complex trade relationships and are therefore relevant to the discussion of a common market. Significant rhetoric has been made recently in the political arena about the dangers of unravelling trade relations, so understanding reasons for and against integrating will provide clarity to the discussion. Furthermore, understanding the common market and its application both historically and in theory will help with the global cultural analysis on Germany given the country is a member of the European Union (Saterlee, 2014, p. 185).
2. Explanation of the Key Term
Brian Saterlee in his book, “Cross Border Commerce: With Biblical Worldview Applications,” defines the key term “Common Market” as the “freedom of movement of the four factors of production: goods, services, capital, and labor” along with elements of the “Customs Union” (2014, pp. 184-185). Important elements of the customs union included in the common market are the establishment of similar trade policies with nonmembers and in the “free trade area” between members of the market (Saterlee, 2014, p. 184). The market can also include commonality of leadership in trade and in the creation of a competitive and sustaining marketplace. Overall, the market provides for greater partnership between the member countries and can result in an increased “Economic Union” later (Saterlee, 2014, p. 185).
3. Major Article Summary
The article, “Who Is Against a Common Market?” by Giovanni Facchini and Cecilia Testa, presented a theory about a sample common market using three countries and then an analysis of the results both before and after the formation (2009, p. 1068). Facchini and Testa first consider the literature currently available on the concept, to include the democratic influence on joining a common market and the impact nonmembers have on the effectiveness of the members within the common market (Facchini & Cecilia, 2009, pp. 1071-1073). Discussion about the dangers of separation and the impact of retaining control over individual relationships with nonmember countries was briefly mentioned (Facchini & Cecilia, 2009).
Facchini & Cecilia created a model of three countries with two countries representing the interaction within the common market and the third country reflecting the “rest of the world” (2009, pp. 1073-1074). The model keeps most variables constant, such as capital and labor, while allowing the initial two countries to “restrict or promote factor flows…to maximize the welfare of the majority of the native population” (Facchini & Cecilia, 2009, p. 1074). The model then allows for the creation of a common market to remove barriers between the same two countries if the involved citizens benefit by integrating (Facchini & Cecilia, 2009).
The economic consequences of the creation of the common market were next identified by Facchini & Cecilia to be “the relocation of capital and labor between the member countries” and the “incentive to relocate” between countries if there remains a “positive price differential” (2009, pp. 1078-1080). In addition, if there remains a demand not being met between the two countries then importing from the third country would occur but without a corresponding decline in profits (Facchini & Cecilia, 2009). Furthermore, the variables of capital and labor, differences in economic sizes, ownership distribution, and the government’s protective actions are reviewed (Facchini & Cecilia, 2009, pp. 1088-1097).
Facchini & Cecilia conclude the article by assessing that the likelihood within a democratic decision-making process of forming a common market is based on the factor differences between the involved countries (2009). While over the long-term the equilibrium of two countries in a common market will adjust, there will be immediate consequences that may negatively impact one country while positively impacting the other in regards to the movement of labor and capital (Facchini & Cecilia, 2009).
4. Discussion
The cited article represents an application of the common market when formed between two countries and in their relationship to a third country. The free movement of capital and labor was recognized between the two countries by increases and decreases based on what their ratios were before the common market (Saterlee, 2014). However, keeping the variable of trade policies flexible with the third country was in contrast to the previously defined conception of a common market, mainly to provide fixed points for analysis in the study. The equilibrium eventually established between the two countries further reflects the newly competitive nature the common market would then potentially have with outside trading partners. The commonality of leadership was also expressed in the article through the democractic process taken by involved citizens in choosing to join a common market. Overall, the article presented reasonable arguments for the impact on a country in the short-term as a result of the common market formation described by Saterlee while the long-term move was towards equilibrium (2014).
Another article, “Dispute Resolution as a Catalyst for Economic Integration and an Agent for Deepening Integration: NAFTA and MERCOSUR?” by Cherie Taylor discussed the need for a dispute settlement process to be established along with any economic integration (1997, p. 850). The settlement reflects the need for citizens who are willingly entering into a common market arrangement to identify ways to alleviate the impact of changes that will occur as the involved parties move towards equilibrium. The next article, “Interpreting the ECFA: A New Common Market for Taiwan and Mainland China?” by Yen-Hsueh Lai explored the common market between Taiwan and China and how over the long-term that “economic and social integration” will occur (2011, p. 190). Both countries will become “competitive with other Asian and non-Asian countries” while their “national strategy” will be uniquely reinforced in adjusting to the third country apart from the common market (Lai, 2011, p. 191).
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