International Marketing Analysis
Degrees of Economic Cooperation
There are many degrees of economic cooperation, ranging from agreement between two or more nations to reductions of barrier to trade, to the full-scale economic integration of two or more national economies (Keegan, 2002). The marketing implications of trade alliances may include harmonization of business requirements such as packaging requirements, a common currency that allow consumers to more easily compare pricing across countries and economic development that leads to more consumers who can afford to buy more products. There are four degrees of cooperation and integration; Free Trade Area (FTA), Customs Union, Custom Market and Economic Union. Free Trade Area (FTA) eliminates most of the trade barriers such as tariffs, quotas and preferences on the flow of goods and services between its member countries. The system discourages importing goods in the member country with the lowest tariff for shipment to countries within the area with higher external tariffs. The European Economic Area is an example of the FTA that includes the 15 nation European Union and Norway, Liechtenstein and Iceland. In 1994 the North American Free Trade Agreement (NAFTA) between United States, Canada and Mexico became effective and formed the largest free trade area at the time (Keegan, 2002). The Custom Union is a trade agreement where members agree to the establishment of common external barriers. Like the Free Trade Area, they also eliminate internal barriers to trade. In other words, Free trade area helps the external countries to invest in the area and not get taxed while Customs Unions restrict external trade. Examples of the custom unions are: The Central American Market, Southern Cone Common Market and the Andean Group (Keegan, 2002) The Common Market, just like in the Free Trade Area and The Custom Union,...