Trade Agreements Advantages And Disadvantages

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Free trade agreements are the agreements with the cooperation between the countries in order to reduce the trade barriers. This would result in an increase in trade between these countries as well as an improvement in the countries’ economy. The significant trade barriers are the import quotas and tariffs. The trade between the countries can occur in both goods and services. Each Trade agreements are different - different scope, different area coverage, different targeted goods and industries, for example. However, not only the countries will gain benefits from the free trade agreements but this would also affect the countries as well. Therefore, each country is carefully considered both advantages and disadvantages from each trade agreements…show more content…
This would result in an increase in trade as well as an improvement in countries' economy and welfare. This agreement was concluded and agree upon by all the members on October 5, 2015 and was signed by all country members on February 4, 2016.
The vision of the TPP is to "promote economic growth; support the creation and retention of jobs; enhance innovation, productivity and competitiveness; raise living standards; reduce poverty in our countries; and promote transparency, good governance, and enhanced labor and environmental protections" (The Office of the United States Trade Representative, 2015).
The TPP includes the trades in both goods and services between 12 countries. It will reduce the tariff for most of the goods and services and also allow the movement of labor across the countries. It also covers the wide range of rules and restrictions on various topics, from electronic commerce, government procurement, intellectual property to labor and
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Japanese companies then could gain the opportunity to expand its business oversea as well as direct investments in other countries.
- A tariff reduction in the automobile industry would give benefit to the exporting firms, especially Japanese firms, who are a large exporter of the automobile, would gain benefit from this tariff reduction. In addition, the TPP also allows only 45% of the parts of the automobile to be made within the TPP. This would allow the exporting companies to be able to import parts of the automobile from low-cost countries, such as China. So the exporting firms would be able to buy lower-cost parts and sell the vehicles with reduced tariffs to overseas, such as the United States.
- A tariff reduction in agricultural, dairy and other goods will lower the cost to Japanese consumers. However, this would impact the local producers as the imported goods would have a lower price than the local goods, then the consumers would shift to buy the imported goods instead. Luckily, Japan has one of the most stringent food safety laws in the world, so not as much imported goods would be able to pass these food safety laws. Furthermore, the Japanese producers themselves need to increase its efficiency in its production in order to better compete with foreign imported

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