Free trade agreements (FTAs) have become increasingly important in today`s globalized economy. While they are designed to facilitate trade and investment between countries, they can vary greatly depending on the geography and culture of the countries involved.
Geography plays a significant role in shaping FTAs. Countries that share borders or are part of regional trading blocs tend to form FTAs with each other. For example, the North American Free Trade Agreement (NAFTA) was formed between the United States, Canada, and Mexico due to their geographical proximity and shared economic interests. Meanwhile, the Association of Southeast Asian Nations (ASEAN) was formed among 10 Southeast Asian countries to promote regional economic integration.
Another factor influenced by geography is the types of products that are traded. For example, countries with fertile lands and abundant resources such as Brazil, Argentina, and Chile are major exporters of agricultural products like soybeans, corn, and beef. As a result, FTAs between these countries and others typically include agricultural goods.
Culture also plays a significant role in shaping FTAs. Trade agreements involve negotiation between parties, and negotiations are influenced by cultural factors such as communication styles, negotiation tactics, and ethical norms. For example, countries with a collectivist culture, such as Japan, prioritize cooperation and harmony in negotiations. This is reflected in the Japan-Philippines Economic Partnership Agreement, which includes provisions for cooperation in areas such as infrastructure, disaster prevention, and human resource development.
Cultural norms also impact the types of goods traded and the level of protectionism in FTAs. For instance, in Islamic countries, the consumption of pork is prohibited, thereby affecting the trade of pork products with non-Muslim countries. Similarly, some African countries have stringent policies for the importation of second-hand clothes, affecting trade with developed countries.
Finally, political and historical relationships between countries can also shape FTAs. For instance, countries that share a colonial history or a common language may be more likely to sign an FTA. This is evident in the preferential trade agreements between the United Kingdom and its former colonies.
In conclusion, geography and culture play significant roles in shaping the creation of FTAs. By understanding the unique factors that influence negotiations and trade relations, countries can craft FTAs that are mutually beneficial and ensure a smooth functioning global economy.