International Marketing Assessing the Impact

International Marketing Assessing the Impact of U.S. Strategy For Managing Trade Agreements continues to lag the rest of the world on trade agreements, with President Obama and his staff citing trade enforcement as a priority over the creation of strong bilateral and multilateral trade relationships globally. As a result, the U.S. lags many nations in the number and strength of trading alliances.

This is translating into a stagnating economy and one that seeks to use existing trade relationships not for growth but for transitioning costs out of flat or negative-growth markets on products that are highly inelastic. In short, very mature and dying industries are the first to be most promoted and put into trading alliances.

The intent of this analysis is to look at trade agreements including the Free Trade Area of the Americas (FTAA), including whether it has been more beneficial for American or Mexican companies, workers and consumers or not. Analysis It is often argued that the freer the trade, the better for Americans and their trading partners alike (Kim, 2010).

This is in fact not the case, as often trade agreements, when created with a mindset of protectionism and enforcement, actually accelerate unbalanced trade and harm one of the partners in the trading agreement. NAFTA is one such case. Studies indicate that the unemployment rate dropped significantly on both side of the U.S. And Mexican borders, yet the acceleration of price reductions and the consolidation of industries that were already mature was hastened by the decision (Kim, 2010). What happened is that U.S.

companies rushed to outsource their most easily taught jobs, often those with mid- to low wages to border towns throughout Mexico. This was done for the cost and tax advantages in addition to the convenience of having a factory or production center just across the border in Tijuana, Nogales or El Paso. The U.S. companies have benefited from the cost reductions to labor, the significantly lower healthcare costs, and the lower compliance costs if they are privately held with subsidiaries in Mexico.

They have also had to pay the price of protecting their factories and employees in an area known for rapid escalation of drug violence as well. In aggregate, between Mexican and U.S. companies, the latter is by far more ahead on both the NAFTA and Free Trade Area of the Americas agreements. As for the comparison of Mexican and U.S. workers, the Mexican workers have an opportunity to gain higher paying jobs and American workers have to contend with their skills becoming more commoditized and work less.

The trade policy of the U.S. has been to promote the global relocation of highly commoditized, low risk industries out of the country, which has harmed employment in these sectors while in some cases forcing the industry itself to consolidate and go.