Advantages Integration and agreements made will reduce tariffs barriers that are associated with trades of goods, services and the factors of produced goods between countries (Hill, 2004). As this paper will demonstrate a proper analysis of how integration will promote global advantages in business, and will deliberate the disadvantages and advantages of integration. Therefore touching basis of contrast and comparing the development of economic stages within a region and the effect on the process of development of business globally. NAFTA) North American Free Trade Agreement will be discussed between neighboring countries. Canada and the United Sates in this agreement have eliminated most of the tariffs that are incorporated in the trades of the products amongst these two regions. Effect in January 1, 1994, (NAFTA) has been a major force in increasing the agricultural trade among the two countries and it is the largest trade bloc in the world in terms of combined gross domestic product (GDP) of its members. Since implemented, the United States and Canada has been 112 percent.
In addition, trades between these three countries have improved themselves over $333. 8 billion throughout the existence of the unification (Kroll, 2005). The advantage of integration regionally is that there are no imposed restrictions on the trade. This will allow countries to focus on the services and produced goods in a more efficient manner to drive down cost, which will boost the economy. The free trade without restrictions allows lowering of prices of goods which increases output of goods that are in demand by other countries which will create jobs increased goods lower operating cost.
Also with compiling resources with the neighboring country will allow expansion in an economic outlook, and also persuay political views from major corporations as everyone follows the trend to reduce cost and increase profit. Disadvantages Regional integration involves sacrifices and losses. One or more nations may benefit from the move, but other nations may suffer as a result. National sovereignty is also a major concern for most nations considering integration.
Concerns about national sovereignty arise because close economic integration demands that countries give up some degree of their control over certain policy issues, such as monetary, trade, and fiscal policies (Hill, 2004). Another disadvantage that may plague the country from free trade is the higher cost domestic production is replaced by a less costly and more efficient operating facility, also this will bring a change in the supplier as well, as the lower priced vendors (external) will be replaced by higher marked suppliers.
The U. S is a highly developed with a superior developed infra structure, productivity ranking, and backed with an abundance of natural resources. The U. S. trading partner Canada is adverse and developed economically and also relies on the natural resources it possesses. The Rankings for the U. S is in the upper echelon and Canada is in the bottom tier last in the G8 (group of 8). GDP median for Canada a little over 29,000 and for America is well over the 36,000 mark resulting in the rankings as they are.
In closing to this analysis of how NAFTA can affect both positively and negatively, it is for the countries that abide this agreement to remain vigilant in what is needed to maintain and uphold their end of the agreement. By committing to these agreements integration will impact both economies and world and globally as business levels increase to acceptable standards for the U. S and Canada. This will translate in a great opportunity for expansion for opening doors for other trade agreements products decrease in price and effeciancy rises to better than acceptable rates due to free trade agreements.
As trades are always a daunting task because of monetary issues and personality conflicts. Negotiations will always play a role in how if countries will agree with one another because of conflicts in who will benefit more. Therefore nations will always explore and continue to improve on trade agreements as it will bring in return a better economic outlook and improving lifestyle through integration.