http://www.nytimes.com/2013/09/13/world/europe/corporate-spin-already-on-us-europe-trade-talks.html?pagewanted=2&_r=0
America and The
European Union are in talks about open trade with each other. Companies have
already begun to lobby both sides to be able to get the best possible outcomes
form this deal. Give the geopolitics of this no one is really thinking that this
is going to go smoothly. Ferrari wants America to drop some trade duties on the
importation of cars and car parts. These demands are here because both sides of
the Atlantic are trying to get the best deals so that they can seek to most out
of this trade agreement. Each side is very excited about the talks because
there is a potential for each side to recognize billions of dollars from this
agreement. Both sides feel that this deal will be better for Europe than
America because of the struggles that the E.U. have been having. American
companies are also concerned because there are not as many laws protecting
companies in Europe as there is in America. Such as there is no EU law that
prevents other companies from infringing on the market. There has been idea
such as the investor-state resolution that would allow for companies to file
with the trade commission if they think that their products are being infringed
upon. There are some out there that feel like if these two countries are to
reach an agreement, that there is a possibility that they would set
international trade law for the rest of the countries they trade with. This is
because the EU and America have been racing for so long to seek better
legislation for their own markets that if they are to combine than every other
country will have to adopt their laws and regulations.
I think that this agreement could make each country better
off in the long run. If we are to look at this just from the view of the
country, then I think that this deal will Paretoally optimal because they
talked about how the experts in trade feel that each country will be able to
recognize billions of dollars from this trade. This shows that each country
will be better off because of this deal. If you are to look at this from the view
of individuals in the country then I do not think that it is Paretoally optimal
because one might be worse off because the other country can allocate making
that product more efficiently that the other.
Since that country has better opportunity cost to create the one product
and import another. This comparative advantage for the one country would lead
to that item not being needed to be produced in the other country. This in turn
would lead to that country having to shut down those facilities that produced
those goods. Making the other country's people that does not have the better
opportunity cost to create those goods worse off because they might be losing
their jobs.
I agree that the agreement could make both sides could be better off. With the removal of the European tariffs U.S. producers will be able to import large amounts of products. This would also be true for EU members importing to the U.S. This idea seems to be backed by the EU and the U.S. Companies agree that opening this free trade could help base future dealings and regulations to form between the EU countries and the U.S. By having this free trade everyone would be able to trade generating more welfare for everyone involved.
ReplyDeleteHowever, there is a possibility that large countries could take advantage of this and prevent legislation that they don't want to be passed. These talks could be seen by companies as ways to pick and choose which regulations should be set between the two groups in order to create the most favorable trade agreements for themselves.
I do believe that in the long run this could generate positive things, but in order to get that point there need to be heavily scrutinized discussions with both parties and the companies.
I agree with your comparison of the country versus individuals being better off. I think it is true that both countries, as a whole, could be better off due to a reduction in import tariffs and quotas which ultimately reduce imports. This will lead to more products being able to move between the countries. In addition, both countries would probably shift production to products they are relatively more efficient at producing. This allocation of resources will be optimal for both countries and raise standards of living with more availability of goods.
ReplyDeleteHowever, this doesn't mean that every person in each country will benefit from this transition. Those producing goods which the country is relatively less efficient at producing might be hurt by this agreement. However, the countries' overall welfare should still increase.
I agree with that this agreement could make each country better off in the long run. Obviously,the Pareto optimality relies on the perfect competitive market, this agreement could make every economic unit compete on a fair and level playing field.
ReplyDeleteInitially, these 2 groups have the largest bilateral trade relationship and enjoy the most integrated economic relationship in the world. So establishing the free agreement could add countless billions per year to domestic economy and create precious job positions. In other words, free trade could be just the jump the US economy needs to accelerate recovery, not just for the US, but globally. Secondly,this agreement Focuses on Employment Rate and Demand-Led Growth, which could spur domestic demand and lead both the U.S. and the Europe out of their financial and social troubles. Moreover, this agreement is a kind of effective methods to remove governments barriers, which will necessarily expose businesses to fiercer competition, but it will definitely remove regulatory hurdles now imposed by authorities too. Especially in the tech sectors, the US high-tech enterprises will benefit a lot from the fair treatment with the EU.
I also find myself agreeing that if this agreement is passed then the United States and Europe will be better off in the long run. This agreement would almost in a sense get rid of special interest politics in Washington and Europe regarding restrictions about trade betweenthe two countries. Another aspect that might be worth looking at is that other countries might be effected by the shift in trade. If these restrictions are lifted, than what countries will suffer from their goods not being imported or exported? Another fair thing to look at is who will be the winners and losers within Europe and The United
ReplyDeleteStates. It will be interesting to see who might get laid off and where they might reallocate within the economy.