Continental Free Trade Agreement in America

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Continental Free Trade Agreement in America by Mind Map: Continental Free Trade Agreement in America

1. Principle Free Trade Agreements

1.1. Canada with Costa Rica and Chile

1.2. Chile with Central Common Market, Canada and USA

1.3. Mexico with Central Common Market, Venezuela and Colombia

2. Principle Regional Blocks

2.1. Mercosur is an economic and political bloc comprising Argentina, Brazil, Paraguay, Uruguay, and Venezuela. Created in 1991 as Argentina and Brazil sought to improve their diplomatic and economic relations, the bloc saw a fivefold increase in regional trade in the 1990s. MERCOSUR has promoted as pillars the integrating the principles of Democracy and Economic Development, promoting integration with a human face. In line with these principles, they have joined various agreements on migration, labor, cultural, social, among many others of note matters which are of paramount importance to its inhabitants.

2.2. Cental America Common Market: The purpose of establishing a unified market in Central American countries is even older than the Latin American Integration Association (ALADI) since it dates back to 1951, but its realisation has been hampered by serious political events and external factors. Nevertheless, since the end of the 1980s, adequate conditions have arisen in order to resume the route of regional integration inspired in a joint projection towards the countries external to the area. Accordingly, the presidents of Central American countries have indicated that a free trade zone must be perfected and the regional common market must be used in order to achieve better insertion in the world market.

2.3. The North American Free Trade Agreement (NAFTA) is a comprehensive agreement that sets the rules for international trade and investment between Canada, the United States, and Mexico. The Agreement is a complex and lengthy document that includes eight sections, 22 chapters, and some 2,000 pages. Some of the most important provisions are: the elimination of duties on thousands of goods crossing borders within North America, special commitments regarding telecommunications and financial services, etc.

2.4. Cental America Common Market: The purpose of establishing a unified market in Central American countries is even older than the Latin American Integration Association (ALADI) since it dates back to 1951, but its realisation has been hampered by serious political events and external factors. Nevertheless, since the end of the 1980s, adequate conditions have arisen in order to resume the route of regional integration inspired in a joint projection towards the countries external to the area. Accordingly, the presidents of Central American countries have indicated that a free trade zone must be perfected and the regional common market must be used in order to achieve better insertion in the world market.

2.5. Andean Community is a group of four countries (Bolivia, Colombia, Ecuador and Peru) who integrate voluntarily in order to accomplish an integral development more equilibrated and autonomous due to the integration with every part of America. They tried to generate a sustained cultural, ethnical and liguistical diversity. Integration Andean System has a determined rol and fulfill an specifical institution. The main objectives for this community are: to promote and equilibrated development between American countries due to an economical and social cooperation, to accelerate growing and generation of employment, to facilitate the participation in a regional process, To improve the profile in the economic international context, to strenghten solidarity and reduce the discrepaces in terms of development for countries who are members, etc.

2.6. The Caribbean Community (CARICOM) is a grouping of twenty countries stretching from The Bahamas in the north to Suriname and Guyana in South America. Its pillars are integrated by: to improve standards of living and work, the full employment of labor and other factors of production, expansion of trade and economic relations with Third States, achievement of a greater measure of economic leverage, organization for increased production and productivity, enhanced levels of international competitiveness, etc.

3. Professional's point of view

3.1. "Economic integration and political cooperation in this geographic area (Cuba) require a strong willingness and support by government agents, privates and socials, everything indicates that it would be the only lever capable of setting the region in a better position against its internal weaknesses and external threats. The increased bargaining power of Latin America and the Caribbean is also necessary to place the defense of their interests in multilateral scenes and international forums.The FTAA is currently the main obstacle in the finding of an own path to integration processes in the region, which favor endogenous development and the searching for alternative ways to neoliberal model applied in recent decades, which have had negative results for the majority of its population". Martinez (2004).

3.2. "Generally, the integration process of Latin America and the Caribbean shows significant processes in trade, through the achievement of a large number of intra-regional trade agreements that allowed the almost total reduction of tariff barriers in the trade of goods. However, there are still important challenges in the reduction of non-tariff barriers which highlights the strengthening of regional logistics infrastructure and the accomplishment of a greater physical interconnection. In this sense, the design of investment plans for the development of an appropriate infrastructure that facilitates the various economic activities that public and private companies do, it is essential to continue advancing in trade integration". Secretaría Permanente del SELA (2015)

3.3. "Although Latin America has been able to propose instances that allow us to discuss and advance in some integration processes, which in some cases have resulted in the renasecnce of organizations and institutions, the truth is that the limitations are greater than the scopes and benefits obtained. Geopolitical conflicts that some States have not been capable of overcoming are a clear demonstration of these deficits of Latin American integration. If we add the weaknesses of some democracies in regions, who must live with the fear of suffering popular protests and a constant social and political manipulationby its ruling classes, the serious and real intention to conduct an opened and effective dialogue on integration seems to become alonging difficult to achieve". Quitral (2009).

3.4. "Once we did the analysis to the integration procees in Latinoamerica is found that between the factors which feel vulnerable and undoubted the economical and social advance in Latinoamerica and Caribbean countries and, in consequence makes difficult the progress of the integration and cooperation outlines are found the following: economic crisis, weakness in economic growing among nations, increased conflict and risk in the international relationships, decreased exports diveristy and lack of productive complementarity (...)" Jutinico (2010).

3.5. "Integration between latinoamerican and caribbean countries are essential in order to accomplish a better insertion in the current international economy, filled of challenges and obstrains that even some developed nations have been more privileged". Lopez (2005)

4. My point of view

4.1. It is important to infer that free trade agreements could be an excellent opportunity for companies to make known their products who let them create a competitive and friendly environment, give other countries a different perspective of the national economy which be capable of decreasing the risk of foreign investment and create and space where every country who takes place on the free trade agreement have the same level of equality and equity in economic and social terms. Nevertheless, if we check carefully the data regarding trade balance from Colombia to United States after the approval of the free trade agreement in 2012 between those countries, the perspective could be questionable. According to the data of DANE, Colombian exports who were carried to United States reached a number of 21.833.284 dollars and imports of 14.242.067. From 2012 to 2014, Colombia exports have been decreasing while imports have been increasing; so, it means that trade balance have thrown a negative number throughout this time. Besides, the fact that Colombian companies need to face when an American companies come to the country and install their branches (for instance, the case of Starbucks who opened its first local in Colombia in 2014) have discourage national entrepreneurs to create their new factories because of the constrains they must fight in terms of competitiveness, innovation and marketing. Despite this, it is so wise what Russi (2006) argued in his article: “I consider that we are getting a minimum welfare in the net balance, so far from what we were expected at the beginning of this process. However, we still have time to incline so much more the balance to our approval, reaching objectives such as the homologation of our titles in the United States, (…) and –maybe the most important one- the creation of a permanent bilateral committee with final decision who give a real access to our agricultural exports, so that we can exploit our comparative advantages –natural resources- and create sustainable competitive advantages throughout the time that generate employment and wealth in all the nation”.

5. History of Economic Integration in Central America

5.1. 1916: Free Trade Agreement between Honduran and Salvador

5.2. 1941: Free Trade Agreement between Salvador and Guatemala

5.3. 1951: Central American Integration System is created

5.4. 1954: Central Institute of Public Administration and Central Institute of Investigation and Indutsrial Technology were created

5.5. 1960: General Free Trade of Economic Integration

5.6. 1964: Agreement to establish the Central Monetary Union

5.7. 1990: Economic Action Plan for Central America

5.8. 1993: Protocol of Central Free Trade of Economic Integration

5.9. 2000: Incorporation of a formal process in terms of customs between Honduras and Nicaragua

5.10. 2008: Central Uniform Custom Code was modified