Introduction to Global Business - Essay Example

Introduction to Global Business Table of Contents Table of Contents 2 Answer 3 Answer 2 4 Answer 3 5 Answer 4 5 Reference 6 Answer NAFTA was created in 1994 through an agreement. NAFTA was an economic opportunity which would help to capitalize on the growing export demand with Mexico. Customs union is a kind of trade bloc that generally consists of an entire area where free trade is carried out under an common external tariff (Hufbauer and Schott 1). The countries under a customs union set up a common external trade policy but there are different import quotes used by different countries.

Canada, Mexico and USA need to first set up a tariff union so that different customs duties of the various participating countries can be abolished. Canada, Mexico and USA need to merge in their tariffs and create a single tariff. All the restrictions and customs duties of these three countries must be eliminated and a consensus must be arrived regarding a common tariff. New opportunities of export are created as a result of these abolitions and this will help to boost the economies of these countries.

Customs legislation needs to be progressively created in order to ensure that wherever the goods are imported from by the union, it will be subjected to the same tariff rules prevalent within the union. Common origin rules as well as warehousing procedures needs to be prepared by the union. A single administrative document needs to be established which will help to carry out the activities of the union effectively. A surveillance system need to be established by the union as it would help to exert control on the imports and exports.

The advantages of US companies in the creation of an economic union:- 1) It helps to determine how much say each company has at the time of setting up of policies. 2) It helps to determine how to deal with any economic disruptions as well as redistribution of resources. 3) The import and export activities can be carried out without any hassle. The disadvantages of US companies in the creation of an economic union:- 1) Creating customs union would give rise to immigration problems 2) This immigration problem would result in political disputes. 3) Political integration between various can be can be problematic.

Answer 2 The advantages of regional trade agreements are:- Lower Prices- Regional trade agreements will help to reduce the tariffs between various countries. International export advantages- These agreements will provide trade advantages between various countries. Rewarding allies- These agreements helps to receive rewards. Dispute resolution- These agreements helps to settle disputes. The disadvantages of creating regional trade agreements are:- 1) Expense- The main motto of regional trade agreements is to lower the cost of various items but actually the prices go up. 2) Competition- International trade barriers open up domestic markets which lands various domestic companies to unsustainable competition. 3) Domestic instability- These agreements result in instability of domestic economy.

Answer 3 GATT helps to raise the standard of living, ensure full employment, steady growing volume of income and expand in the production process as well as exchange of goods. The crucial difference between GATT and WTO are:- 1) GATT is a provisional agreement whereas WTO is an organization consisting of permanent agreements. 2) WTO has permanent members whereas GATT has contracting parties. 3) GATT generally deals in trade in goods whereas WTO covers property rights, goods and services. Answer 4 As the CEO of a company I will decide to invest in those countries that have a regional trade agreement with each other.

This would provide my company an opportunity to export and import of goods under one single tariff. The time lags between exports and payments will be reduced as all these countries fall under one single tariff system. Reference Hufbauer, Gary, and Jeffrey Schott. NAFTA Revisited: Achievements and Challenges. Washington DC: Peterson Institute, 2005. Print.