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A country would possibly enter a trade agreement because the agreement improves overall economic welfare, regulates pricing, tariffs, export levels and methods of production. Also, a trade agreement can be signed for noneconomic reasons which can be used to preserve or insulate local cultures from foreign influences. Agreements also allow other countries participating in the trade to transfer technology, which means that companies can access the latest technology and business practices from their foreign partner. A trade agreement allows for a country to expand their business dynamic meaning that since businesses where protected before the agreement, once the protection is removed, they can expand to became a global competitor. On March 15, 2012, the United States entered a trade agreement with Korea. Now, the United States can sell "Made in America" goods, services, and agricultural products to Korean customers. With the reduction of Korean tariffs, this agreement will add about $10 to $12 billion to U.S. Domestic Gross Product and about $10 million to annual merchandise exports to Korea. The free trade agreement eliminated tariffs on a range of products and provided a more secure access for international delivery services. The agreement also helped to solidify the two countries' long lasting alliance.
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Target Competency
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