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GMS 723 (10)
Chapter 10

GMS 723 Chapter Notes - Chapter 10: Caribbean Basin Initiative, Free-Trade Area, North American Free Trade Agreement

Global Management Studies
Course Code
GMS 723
Michael Manjuris

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GMS 723- Chapter 10- Doing Business in the Integrated Americas
Contemporary nations have learned that economic boundaries often transcend geographical
boarders and stimulate international trade
Negotiated economic integration such as the North American Free Trade Agreement
(NAFTA) and the European Union (EU) fuel the exchange of economic wealth within regions
and blocs and is the primary method used to harmonize international trade and investment
in the global world
Strong evidence that trade tents to increase within a region of trading nationsinterstates
controls such as tariffs are reduced
Economic integration tents to have an overall positive effect on trade by providing increased
understanding within trading blocs and more cooperation among nations
Most forms of regional economic cooperation are highly preferential
o In the views of come, serve barriers to outside and are in opposition to multilateral
trade concepts
Economic integration is not newUS was one of the earliest nations to employ economic
integration in 1776
Outsourcing- practice in which companies move or contact out some or all of their
manufacturing or service operations o other companies that specialize in those operations
or to companies in other countries
o Offshoring or producing sharing
Free Trade Areas
Trade among the nations of the America has always need brisk, but tariffs and other barriers
have often stifled profitabilityeconomic growth
Incentives have been put in place to stimulate the potential market that could bring
increased wealth to the hemisphere
o Caribbean basin initiative (CBI)
o Us/ Canada free trade agreement
o North American free trade agreement
o Free trade area of the Americans Miami summit
This area of no trade barriers would embrace a market of almost a billion
people and stretch from Alaska to the tip of Argentina
Negotiations have stalled amid discussions leading to new approaches and
as of this writing, little progress has been made
Another route being considered might be the merger and linking the other
sub regional trade agreements with the FTAA
Expanded NAFTA
NAFTAcomposed of Canada, United Mexican States, and the USA
It is the richest market in the world and has been the first target for anyone doing
international business
Offers preferential tariff treatment for business trading within the single market and is a
major step towards stimulating regional trade
Rules are clear and understandablerequired thought as they apply to given firms products
Tactical implicationsdepend on a product by product analysis as well as whether a form is
an insider or outsider
Key Provisions
NAFTA document is over 1000 pages and its companion tariff schedule is even longer
Changes are the result of users shoring up loopholes and finding better ways of doing
Intent of the basic document (PAGE 244-245)
National treatmentgoods of other parties will be treated, in terms of tariffs laws, as if they
were domestic goods and extends to provincial and state measures
Temporary entry of business people
o Each country will grant temporary entry to four categories of business people
Business visitor
Traders and investors
Intercompany transfers
Certain categories of professionals
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