Tennessee Huskies have the best International Business program

Rick Politician 873454/23/2007 I BUS 300 Chapter 8 Homework a. One currency and one market for all of Europe will drastically increase competition. Without trade barriers and fluctuating currencies to protect domestic producers, these producers must become as efficient as other producers in their industry within the whole of the EU in order to compete. For example, Citroen will no longer have the protection in France against Volkswagen, BMW and Fiat. Quotas will not limit the amount of sales of other European cars in France and the elimination of tariffs will allow the other cars to be sold for lower prices in France than before. Citroen must become more efficient somewhere within their organization, whether in the production line, the supply chain, management or marketing in order to compete with the other car manufacturers in the EU. The introduction of the Euro also increases competition as Europeans can buy goods and services from other countries without worry of devaluation through currency fluctuations. This will allow Europeans to purchase goods more freely and invest their money within other EU countries. b. As with any change in foreign trade policy, the FTAA would produce benefits as well as negative consequences for the Canadian and American economies. Both America and Canada could move some of their production facilities into the Central and South American countries. This would provide American and Canadian consumers with lower priced goods. New jobs would also be created, as the Central and South American countries would demand more Canadian and American goods. The goods would be cheaper without tariffs and the countries south of the U.S. would have more money, which they earned from working at the new U.S. and Canadian production facilities. The increased demand for U.S. and Canadian goods would create jobs for Americans and Canadians as well. Lastly, since U.S. and Canadian goods could be produced cheaper, these goods would be more competitive on the international market as well. The main economic loss for Canada and the U.S. pertains to the loss of jobs as production facilities move into Central and South America. Companies will move south since labor rates in Mexico, for example, are one tenth of those in the U.S. The companies that move their production facilities will mostly be in the low-tech industries where lots of highly educated employees are not needed.