Posted by Jo on Saturday, January 13, 2007 at 5:18pm.
When a nations government commits to participating in a regional trade bloc, there are many issues that can catch a small business off guard. Some of these issues range from increased competition, loss of employees, and the inability to obtain high quality materials that were traditionally available from non member nations from regional suppliers.
The role of the government in assisting companies with these is somewhat tricky. The intention of participating in the regional trade bloc is to increase trade, which is usually the successful outcome for the nation as a whole. One of the benefits of these trade blocs is the reduction of government involvement in trade. For government to provide assistance to its companies can be somewhat hypocritical of the bloc agreement if it hampers trade in any way with other bloc members. In the event that a company’s revenue is threatened by the importation of goods from a non- bloc member, tariffs or import taxes can be imposed to reduce the competition. This would need to be coordinated with member nations to ensure continuity. Another way the government can help is to reduce the imported goods by way of quotas. This would still allow a portion of the goods into the country while assuring that companies within the country or bloc can still compete. The best thing that a government can do for its small companies that struggle after a trade bloc is established is to ensure that all short term funding issues are addressed by setting up assistance services and most importantly, make sure that educational services within the country cater to a countries strengths by shoring up established programs and instituting new programs to address shortcomings as they arise.
While I do believe that a government needs to monitor how participation within a trade bloc has effected companies within its borders, the least amount of government involvement would be best, in my opinion. Trade blocs are continually being amended by opening up trade to other countries over time. Some of the diplomacy that a country takes on in the short term to try to help situations within its borders could have lasting effects with countries that may wish to participate within the bloc in the future
what is the source reference for your writing?
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