IntroductionSustainable Goods Company seeks to make business expansions into one developed country and one developing country. However, the assessment of various factors has to be taken into consideration before the final decision on investment. These evaluations have their target on the understanding of the country’s business environment in terms of macro political and macroeconomic landscapes. From the initial consideration of these two crucial factors with regard to Kenya as the potential developing market and Australia as the potential developed, the findings would not be sufficient enough to warrant sound decisions on investment even though Australia promises a better environment with the potential for business growth as opposed to Kenya. As such, for a better understanding of these markets, it is also significant for Sustainable Goods to consider the analysis of these countries’ trade agreements and their impacts on trade.
Kenya’s Trade Agreements
In the East African country, there is a significant trade agreement under the umbrella of East African Community (EAC) trade agreement which calls for a free among the region’s countries with an approximate population of 145 million people. Additionally, Kenya is a member of Common Market for East and Southern Africa (COMESA), a trading block that has a population of over 400 million people as it encompasses nations from the expansive East and Southern part of the African continent. Additionally, Kenya is a signatory of the African Growth and Opportunity Act (AGOA), legislation that qualifies the country for duty-free access to the United States market (Nezerwe, 2011). Furthermore, there is the concern of Generalized System of Preferences (GSP) that offers Kenyan products a preferential duty treatment to various countries that include Japan, Canada, Australia, the US, and many member countries of Europe such as Finland.
Considering the Kenyan market from the perspective of trade agreements, it is necessary to consider that trade deals such as the AGOA are the most favorable for Sustainable Goods Company. The rationale for this reasoning is the fact that these agreements open more doors for the company to reaching even positions for improving its growth and development in mature markets such as the United States and Australia. Additionally, the GPS initiative for trade also offers Kenya an upper hand a possible trading destination since Sustainable Goods Company would have reasonable access to markets such as the United States, Canada, Finland, and Austria. However, agreements such as ECOWAS and EAC may not be good choices for the organization owing to the turbulent and unpredictable political environments of the African nations.
Australia’s Trade Agreements
Australia, just like many other developed nations, has several trade agreements with both developed and developing countries. In fact, the country has been carrying out robust plans for seeking business expansion with developing economies. For instance, the country has a significant trade agreement with the United States under The Australian Free Trade Agreement (Stenton, 2013). Additionally, the Australia’s North Asia Free Trade Agreements also shows the opportunity for business expansion between Australia and the North Asian nations.
The favorable trade agreement in Australia for the company is The Australian Free Trade Agreement since the country offers the opportunity for a direct link between the subsidiary and the mother company in the US market. Additionally, this trade agreement provides the chances for accessing more developed markets. However, Sustainable Goods Company is not likely to consider the Australia’s North Asia Free Trade Agreements as a better option owing to the fact that most of the Asian nations are plagued with conflicts.
Conclusion
Comparing trade agreements that are in place in Kenya and Australia, it is evident that both potential markets can offer good opportunities for growth and development. However, Australia appears the most favorable target for Sustainable Goods Company owing to the diverse and open nature of its trade partnerships. On the other hand, most of Kenya’s trade agreements are majorly confined within the continent.
- Nezerwe, Y. (2011). The impact of the AGOA legislations on the market returns in Kenya?. San Diego: Alliant International University, Marshall Goldsmith School of Management.
- Stenton, B. (2013). The influence of trade agreements in global agricultural markets. New York: Nova Publishers.
