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Not a wind up but - how do these trade deals actually work? |
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#1 |
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Join Date: Dec 2013
Posts: 623
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Not a wind up but - how do these trade deals actually work?
I can understand how one country can negotiate a preferential trade deal with another - but what happens after the overarching contract is signed. Is it then just up to individual companies to advertise for orders? What if the new market has no need for what we currently supply?
For example I might be a manufacturer of light-bulbs and currently sell all my production to the EU, I could try to sell my bulbs to the new country but - where are getting their bulbs currently, and without severely cutting my costs, why should they bother with me? If I do, do a deal, then the old supplier won't be very happy with us for stealing their business. Seems to me that overarching trade deals only make good press - the actual business contracts will take a long time to secure. |
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#2 |
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Join Date: Aug 2008
Location: London
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A trade agreement doesn't mean that you can now start selling to a country you didnt sell to before. It simply means that you can now sell goods cheaper to that country, due to free or reduced import tariffs, which will make it easier to sell more of the product to that country.
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#3 |
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Join Date: Dec 2013
Posts: 623
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But if they are have a supplier they are happy with then you have no chance of gaining an order, without severely cutting your costs. What is the point of loosing a relationship with the EU to start at the back of the queue with a new country. Many small businesses don't have the resources to start a new advertising campaign with the rest of the world.
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#4 |
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Forum Member
Join Date: Jan 2013
Posts: 695
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Quote:
I can understand how one country can negotiate a preferential trade deal with another - but what happens after the overarching contract is signed. Is it then just up to individual companies to advertise for orders? What if the new market has no need for what we currently supply?
For example I might be a manufacturer of light-bulbs and currently sell all my production to the EU, I could try to sell my bulbs to the new country but - where are getting their bulbs currently, and without severely cutting my costs, why should they bother with me? If I do, do a deal, then the old supplier won't be very happy with us for stealing their business. Seems to me that overarching trade deals only make good press - the actual business contracts will take a long time to secure. The following links relate to Australian FTAs and indicate how FTAs operate. There are advantages but also some disadvantages. http://dfat.gov.au/trade/agreements/...s-of-ftas.aspx http://ftatool.com.au/fta-basics/what-are-the-benefits/ http://www.abc.net.au/news/2015-06-1...d-cons/6553680 http://www.smh.com.au/federal-politi...11-11kkh9.html I hope this gives you a better understanding of FTAs Cheers from wjong.. |
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#5 |
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Forum Member
Join Date: Jul 2002
Posts: 1,458
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Free trade agreements are usually in place to "prioritise" trade between countries.
The EU protects the EU food production by penalising trade between the Eu and Africa. |
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#6 |
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Forum Member
Join Date: Jan 2003
Location: London SW6
Posts: 37,482
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Quote:
But if they are have a supplier they are happy with then you have no chance of gaining an order, without severely cutting your costs. What is the point of loosing a relationship with the EU to start at the back of the queue with a new country. Many small businesses don't have the resources to start a new advertising campaign with the rest of the world.
The issue can be that there's usually a quid pro quo, so we have to lower tariffs and let foreign firms compete with our own. If done properly between equals or countries with little overlap there's benefits to both countries, both sets of populations get more choice and cheaper products and the strong industries in both countries can grow. |
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#7 |
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Forum Member
Join Date: Sep 2005
Posts: 14,772
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Quote:
A trade agreement doesn't mean that you can now start selling to a country you didnt sell to before. It simply means that you can now sell goods cheaper to that country, due to free or reduced import tariffs, which will make it easier to sell more of the product to that country.
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#8 |
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Forum Member
Join Date: Jan 2014
Posts: 2,311
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Quote:
...... it's a set of protocols that allow you to trade. It has nothing to do with anything being cheaper. They might be but that is not what it is all about. Also it doesn't guarantee trade, despite what some died in the wool leavers believe. Always seemed dumb to me turning your backs on you trading partners for a whole load of nationalist crap.
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