BenefitsofFreeTradeAgreement

Freetradeagreements(FTAs)itsacommercialagreementinwhichtwoormore
partiesagreeconcessionofmutualtariffbarriersandthereductionofnontariffbarriersof
goodsandservices.Freetradeagreementsgrantsaccesstonewmarkets,otherformsof
commerce,suchas,intellectualproperty,investment,financeservices,communication
services,ecommerce,environmentalconcern,etc.Freetradeagreementshaveanindefinite
time,meaningtheyremainactiveuntiltheydecidetoendedtheagreement.Freetrade
agreementshelpscountrieseconomiestogrow,raiseemploymentrate,reducesnontariff
barriers.thenextexamplesshowhowfreetradeagreementshelpscountrieseconomies.

Chile(Aaron)

ChileislocatedalongthesouthwesterncoastofSouthAmerica.Afteraperiodof
economicinstabilityunderthesocialistpresidentSalvadorAllendeduringtheearly
1970stheChileanMilitaryundertheleadershipofgeneralAugustoPinochetleada
coupwhichseizedcontrolofthecountry.Aftereconomicproblemsduringthe1980s
theAugustoPinochetbeganaseriesofneoliberaleconomicreformswhichhaslead
toChilescurrentstrongpolicyofpromotionoffreetrade.AccordingtheWorldBank
ChilesGDPwas$277.2Billionfor2013(1)andisoneofthestrongestoftheSouth
Americancountries.ChilesMainexportsarecopper,fishproductsandagricultural
productssuchasfruitandwine(2).Chilecurrentlyhasatradesurplusofover2
billionwithroughly76billionimportedand78billionexported.Chilesmaintrade
partnersareChinaandtheUnitedStates.Chilesunemploymentratewasatan
estimated6%fortheyearof2013.
GDPgrowthChilesGDPgrowthhasbeenquitestrongaftertheglobalrecessionwith
consistenthighergrowthrates.
2010

2011

2012

2013

6%

6%

5%

4%

ChilesGDPpercapitais$15732perpersonif277.2BillionisusedforGDPand17.62
millionisusedforthepopulation.Thereisalittleinflationatarateof1.7%forthe
yearof2013.TheChileanPesoistradingatarateof1Canadiandollarto520.81
ChileanPesosasofOctober14,2014.
Country/tradegroup,dateofsignature(3)

1.MERCOSUR(Argentina,Brazil,Paraguay,UruguayandVenezuela)
2.Canada

December51996

3.Mexico

April171998

25June1996

4.CentralAmerica(CostaRica,ElSalvador,Guatemala,HondurasandNicaragua)
October18
1999

5.EuropeanUnion(UE)
November182002

6.SouthKorea
February152003
7.UnitedStatesofAmerica June62003
8.EuropeanFreeTradeAssociation(Iceland,Liechtenstein,NorwayandSwitzerland)June262003
9.TransPacificStrategicEconomicPartnership(NewZealand,SingaporeandBrunei)July182003
10.China

November182005
11.Panama

June272006
12.Peru
August222006
13.Colombia
November272006
14.Japan

March272007
15.Australia
July302008
16.Turkey
July142009
17.Malaysia
November132010
18.Vietnam
November122011

1.TheWorldBank:Chile(n.d.).RetrievedOctober14,2014,from
http://www.worldbank.org/en/country/chile
2.WorldFactBook:Chile.(n.d.).RetrievedOctober14,2014,from
https://www.cia.gov/library/publications/theworldfactbook/geos/ci.html
3.TradeAgreements:Chile.(n.d.).RetrievedOctober14,2014,from
http://www.sice.oas.org/ctyindex/CHL/CHLagreements_e.asp

Peru(David)

PeruisacountrylocatedonthewestcoastofSouthAmerica.Peruhasdemonstrated
itselfashavingoneofthebesteconomiesofLatinAmericainthepastfiveyears.According
totheTheWorldBank,PerureachedtheirhighestGDPin2013withanoverallof202.30
BillionUSDbetterthanitspreviousyearof192.64billionUSD.TheirGDPGrowthis5.8
percent,andtheirGDPperCapitareacheditshighestofatotalof4066.27USD,comparedto
lastyears3892.26USD.Perusinflationhasdecreasedsincethelastyearfromatotalof3.7
percent,toa2.8percent.Peruspecializesintheminingindustries.Theyarethesecond
largestproducerofsilver,andthirdlargestproducerofcopper.Perualsoexportspetroleum
crude,gascoffee,asparagus,cornapparelandtextilesfishandseafood.
FreeTradeAgreementsandPeru:FreetradeAgreementsarepartofalongterm
commercialstrategythatseekstostrengthenthemarketforPeruvianproducts,withthe

objectivetodevelopcompetitivenessexports,whichinturncreatesmoreandbetterjobs.
Exportssustainsapproximately15outevery100jobs,makingitreallyimportantforthe
economy. Peruhasshownahighdevelopmentthroughinternationalcommerce.Local
peruvianmarketsofferlowopportunitieswhenitcomestonationalproduction,butwhen
engagingininternationalcommerce,reducesizemarketscanincreasestheirsize,therefore
producingmorejobstomeetthedemand.
Perubenefitsalotfromfreetradeagreements.(1)Ithelpscontributingwiththe
increaseincompetitivenessbetweenbusinesses(sincetheycanobtaincheapermachinery
andrawmaterialsfromothercountries).(2)Incrementsforeigninvestment,givingthem
confidenceandstabilityinthetimefortheinvestors.(3)Ithelpstoimproveitscompetitiveness
withothercountriesthatalreadyhadfreetradeagreementswithothercountries,asithelps
gainingadvantageoverothercountrieswhichdonothaveanytradeagreementswithother
countries.(4)Andfinally,promotesthecreationofjobsbyfocusingonhigherexportations.
Perualsobenefitsfromfreetradeagreementswhenitcomestoimports.Consumers
havemoreaccesstoabiggervarietyofgoodsandserviceswithlowercosts,i.ecomputers,
transportation,electronics,andanyothergoodsthatPerudoesnotproduce.Inaddition,they
willhavetopromoterulesandprocedures,toestablishamoreefficientandtransparent
Customs.Thismeansloweringthecostsofstorageandhandlingfromtheimporters,andin
turn,loweringthepricespaidbytheconsumers.

PerusFreetradeagreements:hereisalistofsomeoftheactivefreetrade
agreementsofPeru:
UnitedStatesofAmericaPeruFreeTradeAgreement(2006).
CanadaPeruFreeTradeAgreement(2009).
EuropeanFreeTradeAssociation(EFTA)(2010).
EuropeanUnionPeruTradeAgreement(2012).
JapanPeruFreeTradeAgreement(2012).
CostaRicaPeruFreeTradeAgreement(2013)
Workcited
SICE:Countries:Peru:TradeAgreements.(n.d.).SICE:Countries:Peru:Trade
Agreements.RetrievedOctober14,2014,from
http://www.sice.oas.org/ctyindex/PER/PERa
AcuerdosComercialesdelPer.(n.d.).AcuerdosComercialesdelPer.
RetrievedOctober14,2014,from
http://www.acuerdoscomerciales.gob.pe/index.php?option=com_content&view=
article&id=48%3Aloquedebemossaberdelostlc&catid=44%3Aloquedebem
ossaberdelostlc&Itemid=80
Peru.(n.d.).Peru.RetrievedOctober14,2014,from
http://www.worldbank.org/en/country/peru

AfricaFreeTrade(Devon)

Africaistheworldssecondlargestandalsosecondmostpopulouscontinent.Africahas1.1
billionpeopleasof2013whichaccountsforaround15%oftheworldspopulation.The
continentissurroundedbytheMediterraneanSeatothenorth,boththeSuezCanalandthe
RedSeaalongtheSinaiPeninsulatothenortheast,theIndianOceantotheeastand
southeast,andtheAtlanticOceantothewest.AlotofpeoplekindofthrowAfricaunderthe
busandjusthinkthattheyareapoorandacountrythatwonteverreallydevelop.Butthe
Africaneconomyhasalottoofferitconsistsoftradeinindustrial,agricultureandhuman
resources.AfricaisaresourcerichcontinentbutmanyAfricanpeoplearepoor.Recent
growthhasbeenduetogrowthinsalesincommodities,services,andmanufacturing.Africais
expectedtoreachaGDPof$15trillionby2060.InMarch2013,Africawasidentifiedasthe
world'spoorestinhabitedcontinenthowever,theWorldBankexpectsthatmostAfrican
countrieswillreach"middleincomeby2025ifcurrentgrowthratescontinue.

SouthAfricaiswheresomeofthemosttradingtakesplace.SouthAfricahasalargetrade
agreementwiththeEuropeanUnionandisgovernedbyTheTrade,Developmentand
CooperationAgreement.TheTrade,DevelopmentandCooperationAgreementhave
establishedafreetradeareathatcoversabout90%ofbilateraltradebetweentheEuropean
UnionandSouthAfrica.
SouthAfricaisalsotheworldsbiggestproducerofgoldanddiamondsbutalsohavealarge
poolofskilledlaborandadvancedcommunicationsanddevelopedfinancialresources.This
helpsthemascountryalotbecausethisiswhatmostcountriesaremissingwhenitcomesto
trade.
ThemainexportedcommoditiesofAfricannationsare:
Palmoil
Goldanddiamonds
Oil
Cocoa
Timber
Preciousmetals
Nigeriaisoneoftheworldslargestoilreservesandcanproduceupto3.2millionbarrelsa
day.Inthelasttwodecades,countriessuchasSudan,Angola,andEquatorialGuineahave
alsobenefitedduetotheiroilexports.Thisishugebecausemorecountriesmaylookatthem
togetoil.
Africahasabitofastrugglewithfoodsothatisoneoftheirmainimportsalsosomemedical
supplies.HerearesomeofAfricasbiggestimports:

Chemicals
Petroleumproducts
Scientificinstruments
Foodstuffs
MachinesandEquipment
1.http://www.worldbank.org/en/region/afr/overview
2.http://globalpublicsquare.blogs.cnn.com/2013/01/22/getreadyforanafricaboom/

3.http://www.usaid.gov/wherewework/africa

Japan(Ryan)
JapansFreetradeandeconomicpartnershipagreementssupportmuchofthe
domesticindustriesinJapan.JapanReliesonafewcountriesforthebulkofitsexportssuch
asChina:18%,UnitedStates:18%,SouthKorea:8%,Singapore:6%,Thailand:5%,Hong
Kong:5%andWesternEurope:10%.Ofthemainnationsofexport,onlySingaporeand
ThailandhasaconcludedFreeTradeagreement,andtherestareinprocessofnegotiating
witheconomicpartnershipagreements(EPAs).Thatwillactsimilarlyasfreetradebutwith
continuallychangingimportandexportrestrictionsortariffs.
TheGDPofJapanin2013was4.9trillionUSdollars,lowering8.4%ofGDPlastyear.
Aathegrowthhasbeenfluctuatingupanddownoverthepastfewyears,sittingat1.5%
growthratein2013.TheGDPpercapitais38,492.09US$loweringalsooverthepastfew
years.Japanscurrentstrugglesincludeapublicsectordebtworth243%ofGDP,boththe
highestamongmajoreconomies.Thecurrentinflationrateis3.3%,risingfastfromthepast5
years,startingat1.5%in2010.Yearonyear,thebiggestpriceincreaseswerereportedfor:
fuel,lightandwatercharges(+6.4percent)food(+4.9percent).Informationisaccordingto
datacompiledbytheInternationalMonetaryFund.DespiteadecliningGDP,Japanstillranks
amongofthetopthreecountriesinoverallGDP.

Japaneconomyreliesstronglyonthenegotiatingtradeagreementswithspecifically
ChinaandUnitedStates,astheyimport48%ofJapansTotalExportinggoodsandservices.
Whichisagreatamountoftotalworldexports,asJapansupplies5%ofexportinggoods
worldwide,and4%ofexportingservicesworldwide.HighTechnologyinnovationhaspowered
agreatindustrygrowthsince1960.AttractinglargeForeignDirectInvestment(FDI)
consistently.TheFDINETInflowfrom2013was3,715,043,055US$,fuellingthemajorexport
industriesfromJapan,fromvehiclesholding20.8%ofexports,machineryproducing18.9%
andelectronicequipmentindustryexporting15.1%.Thevehicleproductionandservicing
industryinJapanemploys5.45millionworkers,8.7%oftotalworkforceinJapan.

Concluded

Singapore

November1,2007

Mexico

March1,2012

Malaysia

June13,2006

Chile

April16,2009

Thailand

June8,2009

Indonesia

July1,2008

Brunei

June10,2010

ASEAN

June2,2014

Philippines

December18,2009

Switzerland

February10,2011

VietNam

October1,2009

India

June30,2011

Peru

September19,2014

InconclusionFreeTradehasbeenbeneficialtotheeconomiesandpeopleinthecasesof
Japan,Peru,ChileandSouthAfrica.IthashelpeddevelopJapanseconomyafterworldwar
twointoamanufacturingpowerhousebuildingsomeofthebestcarsintheworld.Ithas
transformedChilefromexportingrawcopperandnitratesintoamorediversifiedeconomy
thatexportssomeoftheworldsbestwines.IthashelpedSouthAfricapostapartheidand
developedPerustextileindustryfrom.FreeTradehasbeenbeneficialinthesecasesand
shouldbecontinued.

Workscited(Japan)

MinistyoffinanceJapan.(2014,September14).RetrievedOctober15,2014,from
http://www.mof.go.jp/english/index.htm

JAPAN|ECONOMICINDICATORS|DATALISTBYCOUNTRY.(2014,July19).Retrieved
October15,2014,fromhttp://www.tradingeconomics.com/japan/

WorldbankopendataJapan.(2014,June12).RetrievedOctober15,2014,from
http://www.worldbank.org/en/country/japan

DavidDominguez
RyanHiemstra
AaronAllison

DevonCasey