BBC covered a story revolving around the fact that the US and the EU are attempting to create free trade areas between the themselves though eliminating tariffs. If this plan follows through, the article said that it would be “the world’s biggest free trade zone”. Follow more upon the article by clicking here.
In my opinion, there are benefits and disadvantages to this plan, but the advantages may outweigh the disadvantages. In some cases the abolishment of tariffs, would be somewhat beneficial to the consumers in both the US and the EU. This is because it promotes greater choice of product for consumers and producers at lower prices. Consumers will now be able to buy less expensive products (domestic and foreign) and producers would be able to purchase less expensive raw materials and semi manufactured goods. In addition, opening up the market to foreigners without a tariff calls for increase in competition. Domestic firms will now be competing with foreign firms. However, there are some costs that accompany the abolishment of tariffs. Infant and domestic industries in either country (mainly the US because the EU is already a monetary and economic union) would be at a disadvantage. The infant industries would not be able to compete with the larger industries in the US and EU, as for domestic and infant industries, competition has increased immensely. On the other hand, it allows for an increase in jobs and helps the industry grow.
The article:
http://www.bbc.com/news/business-29482892
Resources:
http://www.investopedia.com/terms/e/europeanunion.asp