The Role of Regional Integration in Promoting Global Business free essay sample

The Role of Regional Integration in Promoting Global Business. Regional integration is growing as a means for economic growth for many countries. Throughout this paper we will discuss the promoting of regional integration into the Northern South America region. In addition, the paper will discuss the advantages and disadvantages of regional integration as it relates to (NAFTA, EU, APEC, ASEAN, CAFTA). Regional Overview The Northern South America region contains two countries Columbia and Venezuela. Both of the countries in this region have a wide array of natural resources that have been exploited by European settlers for centuries. The population combined for the two countries is estimated at 70 million. â€Å"Most major cities are often located on the coast of either the three main waterways bordering the region- the Pacific Ocean, the Atlantic Ocean and the Caribbean Sea. The two Andean States of Colombia and Venezuela are located in the northwestern part of the continent. We will write a custom essay sample on The Role of Regional Integration in Promoting Global Business or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page They both are Caribbean-bordering countries. Two independent states and a dependent state are located in the Guiana Highlands. Guyana, Suriname and French Guiana, respectively are located on the Atlantic Ocean. † (www. answers. com) Integrating Latin America Regional integration began in the Northern South America Region in the 1990’s. For most of Latin America this was also the case. This integration enabled these countries to strengthen there relations with other countries by revamping existing policies to meet and coexist with the changing world. In addition to regional integration schemes or multi-countries FTAs (free trade agreements), such as NAFTA, MERCOSUR and FTAA, various bi-lateral FTAs have emerged amongst Latin American countries and between then and extra-regional countries in the second half of the 1990s† (p. 2). Columbia for example has adopted the CFTA (Columbia free trade agreement). This agreement allows for over eighty percent of U. S. exports of consumer and industrial products to Colombia will become duty-free immediately, with remaining tariffs phased out over 10 years. Key U.S. exports will gain immediate duty-free access to Colombia. Colombia agreed to allow trade in remanufactured goods, and will join the WTO Information Technology Agreement. This agreement also crates new opportunities in the following areas: Farmers and Ranchers: â€Å"U. S. farm exports to Colombia that will receive immediate duty-free treatment include high quality beef, cotton, wheat, soybeans, soybean meal; key fruits and vegetables including apples, pears, peaches, and cherries; and many processed food products including frozen french fries and cookies.U. S. farm products that will benefit from improved market access include pork, beef, corn, poultry, rice, fruits and vegetables, processed products, and dairy products† (www. ustr. gov). †¢Textiles and Apparel: The textile and apparel industry for U. S. Columbian fiber, yarn, fabric and apparel manufacturing will now be quota free and duty free creating new opportunities. †¢Strong Protection for U. S. Investors: The agreement will enable investors the right to establish, acquire, and operate on equal footing as local investors. Expanded access to Service Markets: Among other changes Colombia has joined the Andean Group, an economic organization of South American nations, in 1969. Since then the country has signed free-trade pacts with other Andean countries and Mexico. In the end, the steps taken by Columbia enable both the country itself and other foreign countries and the organizations throughout the benefits of globalization. Venezuela the other country in the North South America region is not as open to the globalization concepts like Columbia. Venezuela is not listed with (NAFTA, EU, APEC, ASEAN, CAFTA), but indirectly, with the regional integration, NAFTA and the others might effect the global expansion. In fact, Venezuelan President Hugo Chavez at the 5th Alba Summit was quoted as saying â€Å"ALBA is not an agreement of the elite. ALBA is born from down below, from the grassroots of the population. Without the people no union would be possible and that is one of the criticisms that we have always made of other integration efforts† (www. venezuelanalysis. com). ALBA the Bolivarian Alternative for the Americas, was first proposed by Venezuelan President Hugo Chavez in 2001 as an alternative to the Free Trade Area of the Americas (FTAA) promoted by the United States government. The leaders of ALBA are Bolivia, Cuba, Venezuela, and Nicaragua. Venezuela who is the world’s third largest oil-exporter, ranking within the top four petroleum exporters to the United States. According to the World Bank, petroleum accounts for about 80% of Venezuela’s total exports, 25% of GDP, and 50% of all fiscal revenues. Outside of regional integration and globalization on a limited scale Venezuela plans to utilize its oil as the main building block to improve its economy and wealth of the people. However, Venezuela is apart of the Andean Community which consists of Bolivia, Colombia, Ecuador, Peru and Venezuela. Also in 1995, Venezuela, Columbia, and Mexico established the MLFTA (Multilateral Free Trade Agreement). Other agreements in place but are not limited to the ed ECA with Chile which was signed by Venezuela and Columbia in 1993 and increased intra and inter-regional trade. In addition to the above mentioned agreement Venezuela and Columbia are actively negotiated and seeking new agreements to implement for there respective countries. Regional Integration Advantages: †¢Both Columbia and Venezuela benefit from Intra-Regional Trade which has increased their level of trade and commodity exchange between themselves which reduces the inflation and tariff barriers associated with foreign markets resulting in growing prosperity. †¢For Latin America as a whole, intra-regional trade increased from 11. 9% (1985) to 15. 2% (1990s) to 25. 6% (1994) to 31. % (1998), which impacted further regional integration. Through regional integration both countries will have the ability to grow in the global market place benefiting the overall economic growth, jobs, education, and health benefits. †¢The benefit of receiving duty-free treatment, which aids agriculture, manufacturing, etc. Disadvantages: On the other hand, there are some disadvantages to regional integration that have been noted to affect Latin America; i. e. the North South America Region. These disadvantages include: †¢Factory production was decreased each year steady through the 1990’s. Many believe this was caused by poor education, fragile public institutions, and the advancement of new technologies. †¢The small size of the countries on a global scale run the risk that they will not gain appeal from organizations outside the region who want to invest, produce, and manufacture in foreign countries. In closing, regional integration in the North South America region is in constant development. As seen in the paper Columbia is far more advanced in its views concerning regional integration and globalization. Venezuela, is taking steps to become more regional integrated, but have a long way to go.