Why the USA participate in both the WTO and regional economic blocs?

Why the USA participate in both the WTO and regional economic blocs
This section of the paper explores the United States of America and China chose to participate in both the WTO and regional blocs. The Unites States of America has been a member state of the World Trade Organization since 1st January, 1995 and since 1st January 1948; the country has also been a member of General Agreement on Tariffs. The USA is one of the founder member states of WTO and has been a consistent supporter of the activities of the multilateral trading system. Through its place in the WTO, the USA advances and protects American economic interests, workers and businesses while expanding the foreign markets (Winter, 2015, pp 94).
The US joined WTO in order to succeed in increasing trade with other member states. To the US, WTO provides a strong boost for business and trade between nations that are not geographically close, to the US and nations that are different in terms of their type of regimes and geopolitical power. Additional benefits that USA draws from WTO are a reduction of export volatility. Through the WTO the USA has witnessed reduced agricultural tariffs that are economically inefficient and politically hard to eliminate (Subramanian, 2007, pp.151-175).
USA subscribed to be a member of the WTO in order to get opportunities to sell their goods and products overseas because WTO regulations require member states to keep low trade barriers for other member nations. For instance, the WTO agreement provides U.S exporters with greater reach to Japanese agricultural markets and European markets.
According to a study, (Wade, 2003, pp.621-644), the government of United States gets better trade and business output by using the trade dispute settling mechanisms instead of directly negotiating with other nations. USA being a WTO member state can settle trade disagreement with other member states using the dispute settlement system that is designed to be unbiased. In fact, evidence indicates that European Union and U.s exporters are favored by the WTO system when it comes to faster resolution of disputes. According to (Busch and Reinhardt, 2006, pp.446-477), WTO dispute settlement panels usually moderate the scopes of judgments delivered on the United Sates and E.U-the most powerful members of the organization. And this is one of the reasons why America always strives to keep the WTO panel to be pro-America.
The USA participates in the WTO to lead reforms in the organization. One of the reforms it seeks to implement is the promotion of market oriented policies. The WTO has the responsibility of l responding to non-market economy challenges-those economies that do not succeed in respecting the basic principles like market access, non-discrimination, reciprocity, transparency and fairness. The current regulations of the WTO do not have sufficient tools to address the challenges that it faces. The role of the most powerful member of the WTO like the USA is to set new rules that surround issues like state enterprises, subsidies, and forced technologies transfers. The latest trilateral statement to be proposed by the US advanced for new kinds of prohibited subsidies under the Agreement on Subsidies and Countervailing Measures (Busch and Reinhardt, 2006, pp.446-477).
Next, the US partakes in advanced differentiation. The United States being one of the powerful member states participate in the WTO to ascertain the magnitude of services that countries get from the WTO based on their economic status. While poor member states get foreign aids in terms of food and medical supplies, powerful organizations like China are controlled from producing arms and ammunitions that could cause great harm to the world economy if used (Busch and Reinhardt, 2006, pp.446-477).
Another key reason why the US participates in the WTO is to promote transparency in the dealings of the organization. Te United States tabled a transparency proposal that opines that appropriate consequences for non compliance to the organizations rules, regulations and terms of engagement. These include the submission of recent industrial and agricultural subsidies to the organization. Also, in line with transparency the USA and other powerful member states like European nations check on the safety of the world by encouraging notifications. This is a kind of peer pressure where a WTO member state notifies the organization about what other member states are doing. The notifications strategy is used by the US to spy on other member states that they think pose security threats for them (Busch and Reinhardt, 2006, pp.446-477).
Lastly, USA participates in WTO as an appellate body. This means that it brings efforts to address long standing issues in the organization. To start with, no WTO member state has been more consistent and constructively involved on the organization’s issues more than the USA. As widely known across many countries, USA has been involved in many issues of the organization, among them setting up of rules, appointments of new members, issuing of advisory opinions, fact-finding, instilling rulings and changing of the organization’s rules and regulations. Despite the failure of engagements of WTO member states, the US continues to look for ways of improving the organization’s dispute settling system (Busch and Reinhardt, 2006, pp.446-477).
How to enhance USA business competitiveness by applying Porter’s Diamond Model
Michael Porter’s Diamond Model is a frame-work that is diamond shaped, and aims at explaining why some industries in a particular country are international competitive, while other may not. The model is also known as the Theory of National Competitive Advantage of Industries. The theory also explains why some countries in some countries can consistently innovate, while others may not. In this section of the paper, we discuss USA business competitiveness by applying the Porters Diamond Model (Bakan & Dogan, 2012, pp.441-455).
According to Porter’s Diamond Model, the ability of a company to compete at the international level is based on a set of interrelated location advantages that are possessed by some organizations in different countries. The factors include: Firm Strategy, Structure and Rivalry; Factor Conditions; Demand Conditions; and Related and Supporting Industries. In an event that the above named conditions become favorable, they push domestic firms to innovate and upgrade continuously. The competitiveness that results from that is helpful and becomes more necessary when a product is required to compete internationally with globally recognized brands. The preceding paragraphs explain the four parts and two other components that are usually included in this theory, the role that governments and Chance in the growth of certain companies in a country, our case study being the United States of America. The components that are explained act as the national environment where the companies are established and compete with others (Bakan & Dogan, 2012, pp.441-455).
Fig 1: The Porter Diamond Model
Firms Strategies, Structures and Rivalry
The national environment that the firms operate in, in most cases determine how the firms are established, organized, and managed: it affects the firms strategies and how they are structured. In addition, domestic rivalry is very important when it comes to international competitiveness, because it offers organizations a chance to establish unique and sustainable capabilities and strengths. The more intense domestic rivalry is established, the more companies strive to be innovative and improve to easily maintain their competitive advantage (Bakan & Dogan, 2012, pp.441-455). Eventually, this usually helps companies while venturing into international markets that have international competitors. A good example that could explain this better is the American automobile industry that has intense rivalry between automobile companies like Ford Motor Company, Fiat Chrysler and General Motors. Due to their domestic cut-throat competition they have been able to match up to the international competition from brands like Subaru, Mitsubishi, Suzuki, Toyota, Honda and Nissan.
Factor Conditions
Factor conditions in a certain nation imply the capita, natural and human resources available in the country. Some nations for instance are more resource and economically endowed than others (Bakan & Dogan, 2012, pp.441-455). For instance, the United States of America is one of the economically and resourcefully endowed countries in the world. The Unites States of America produces oil, mines Copper, Lithium, Feldspar, Gold and Iron. This could explain why US is one of the richest countries in the world. The country also has a vibrant human resource that constitutes of skilled human labor, scientific and technological know-how and good infrastructure. Porter states that more important are the factor factors, even more important than the natural factor conditions that are naturally present. It is essential that these created factor conditions are continuously improved using the advanced knowledge and skills development. The US does this by continuously innovating to find better technologically inclined way of doing things. The US has created a competitive advantage over other countries when it comes to production of their products by continually upgrading.
Demand Conditions
The home demands exponentially affect how some companies in some countries are (Bakan & Dogan, 2012, pp.441-455). For US automobile industry players Ford Motor Company, Fiat Chrysler and General Motors, a large market offered by the preference of American populace presents more challenges to the companies, but also offer opportunities for them to grow and become better companies capable of competing in the global market. The US automobile industry strives to satisfy the demand of the domestic market has driven the companies to improve and learn the future needs of customers. The US motor giants Ford Motor Company, Fiat Chrysler and General Motors has however grown due to the pressuring demand by their customers to innovate more and attain greater sustainable advantage over their foreign competitors.
Supporting and Related Industries
The availability of supporting and related industries offers a foundation for the success of an industry (Bakan & Dogan, 2012, pp.441-455). In the US, automobile companies seem to be dependent on partnerships and alliances with other firms to establish additional value for clients and attain greater competitive advantage...