Question

In: Economics

Some governments across the Americas are strong supporters of the Free Trade Area of the Americas...

Some governments across the Americas are strong supporters of the Free Trade Area of the Americas (FTAA). This is true despite evidence that small companies typically have difficulty competing against large multinationals when their nations take part in regional trading blocs.

Do you think the FTAA would improve living standards in small countries (such as Ecuador and Nicaragua) or benefit only the largest nations such as Canada and the United States? Explain.

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Expert Solution

Solution

Free trade area of the Americas (FTAA) is an agreement happened between the United States and 34 other countries to reduce the trade barriers between them.

According to me, the FTAA would improve it's standards in small as well as largeest nations. FTAA helps the countries to trade freely and transfer goods freely from one country to another. This also creates a strong relationship between the countries. FTAA also promotes an increment in effectiveness as well as competitiveness. As the efficiency increases, there is a reduction in usage of resources while doing the production of goods in the companies. Thus it will help the countries to maintain a high standards of living.

Because of the Trade Negotiation Committee of FTAA, all the countries participate in the agreement will get benefitted by it whether it is big or small. However, the larger countries will get much more benefit because of it's developed economic conditions and whereas the smaller countries will get less benefit as they has poor economical condition.

Countries which will be participating in the trade will get a tax elimination as well as a removal of barriers and other problems. Because of the free trade small countries can trade their products in the big market and can gain a larger profit. Gradually their demand of the products will also increase.

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