Pros and Cons of Exporting to a Regionally Integrated Market

Published: 2021-10-10 17:05:12
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Since the main Justification behind regional trade agreement is in the best interest of the regional members and at the expense of diverting trades from third party countries. In another word, very few advantages can be found from an exporter’s point of view, not to mention a great deal of stumbling blocks in terms of government protectionism for the better soundness of EUS internal trade. Countries like EIJ are very regionally economically integrated in that there are strong economic union as well as political integration, especially in terms of trade.
As a esult, EIJ will very much benefit from its regionalism from the reduction of tariff and non-tariff barriers that are only enjoyed by member states. Certainly it’s more profitable to expand our market, especially in big country like France, however the drawbacks outweigh extensively in that our competitive advantages will be easily offset by the internal reduction of barriers in EIJ honey manufacturing industry, consequently leaving us very little profit margin.
Besides the fact the sales might shoot up in the short term, there are almost no pros but cons in exporting to ELI, including a lengthy due- processes, no advantages ompare to EIJ members and great degree of country and economic risks. France is the second biggest member in EIJ in terms of honey consumptions. It will certainly account for a major proportion of our production outsource. This will largely increase our sales revenue as well as the economy of scale to expand the company.
Moreover, when penetrating regional integrated market like France, it’s likely our company will be subsidized by government which is critical in logistic and country risk cost cutting. However, prior to entering, EIJ firstly has laid down extensive and lengthy legislation pplying to the EIJ import of honey intended for human consumption “Before an EIJ buyer places an order, he needs to be sure your honey complies with the EIJ requirements and his own quality demands.
U buyers will theretore require documentation on chemical analyses of each batch of honey. Most EIJ honey importers make use of the internationally acknowledged chemical laboratory on honey, Applica, to perform analyses” (CBI, March, 2008) Along with the import license acquisition, it requires extremely long due-process and in turn increasing our inventory storage cost. Secondly, with regional free trade, roduction shifts toward the most efficient manufacturers of honey within the RTA.
The fact that they retaining barriers to trade with nonmembers deprives our cost leadership and consumers will never consider our honey when there are cheaper options elsewhere. Lastly, highly integrated RTA in EIJ also reflects a strong economic union that readily affects France, which makes France’s economic and cultural prospects very volatile to predict and understand since the internal members are very inter-related particularly when there’s an economic recession, for instance the ecent contagion of Greek debt crisis towards EIJ.

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