Free trade agreements (FTAs) have long been in controversy. By some they are hailed as the end all be all of economic growth, while others view them as a tool for the strong to exploit the weak, or a hindrance of worker’s prosperity. While there are degrees of truth to both arguments, the fact remains, trade increases, economic activity increases, and average wealth increases. FTAs need to be utilized with caution however, as many industries in many countries are not up to the competitive standards of the established powerhouses of developed countries. In addition, first-mover advantages often need to be cultivated in insulated environments where kinks in production can be removed and experiments explored without loss of the initial advantage. All of that being said, FTAs drive competition, and competition, in the end, is the best driver of economic growth and innovation.

The beliefs behind the workings of FTAs are quite simple. With lowered trade barriers, countries can specialize in their respective industries, exporting and importing at lower costs, thereby producing more of the product in which they have the competitive advantage. With this increased specialization, competing countries must also streamline their industries. As industries become more efficient, it compounds on itself with inventories, supplies, and general costs decreasing as supplemental industries each become streamlined, again contributing to overall efficiency. The end result being, consumers can consume more for less.

Latin America has already developed several FTAs: CACM, ALBA, along with MERCOSUR, which is the most notable. All of which have had favorable effects on the countries which operate within them. However, one FTA that has been vehemently resisted by several Latin American countries however has been the Free Trade Area of the Americas (FTAA). This agreement would basically be an extension of NAFTA to include all of the Americas except Cuba. The FTAA never came to full fruition after talks broke down in 2003. Many people believe that the FTAA is headed to morbidity for the time being. However, this does not mean that FTAs throughout the Americas will not still function and grow, increasing efficiency, prosperity, and competition throughout the Americas. And as these countries cultivate their industries and become emerging/developed nations, more FTAs will follow.

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