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Is free trade for SMEs an opportunity or threat?

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  1. Introduction
  2. WTO
    1. The attractiveness of the WTO remains strong
    2. The dispute settlement body works
  3. The malfunctioning of the WTO announced the end model?
    1. The Doha round of negotiations
    2. Institutional weaknesses
  4. The WTO does not have the means to ensure effective regulation of trade
  5. Conclusion

SMEs (Small and Medium Scale Enterprises) often seem small when compared to large groups, and this makes them less efficient and less competitive. Similarly, their products also appear more artistic and sometimes of lower quality. Nevertheless, several SMEs have managed to establish themselves across the world. Though their situation is admittedly difficult, they seem more prosperous today. In recent decades, the global economy and the European economy have strengthened international competition. This has affected companies with an export profile and companies targeting the domestic market as well. Some of the drivers behind the growing internationalization of SMEs have a firm base politically, technologically and economically.

In general, the WTO is dedicated to liberalizing the conditions under which international trade takes place. In Europe, several factors like tighter integration, a continual expansion of the European market, general trends of liberalization and deregulation have effectively created a single market. The old barriers to trade have been abolished or are in the process of being abolished. A more efficient market for the benefit of consumers is emerging.

Technology has dramatically improved access to information and communication, and this has enabled geographical dispersion of production. It should also be added that transportation has become more efficient and cheaper for both goods and people. Political changes and declining transport costs have led to the establishment of a production structure that is more internationalized, and a new situation of global competition will soon be seen.

Companies involved in free trade are generally companies that market niche products and have acquired expertise in manufacturing the product. They can only survive against the big companies if they first pass through the choice of more efficient products. Some of them will find no cost to launch projects to develop innovative new products, thus, the specialization of SMEs is a major asset.

The international appears to be a necessity as these markets represent opportunities that we must seek elsewhere. Europe itself is not enough. This explains the huge share of the export turnover of European SMEs.

We will give you an overview of the current situation of free trade for SMEs. Free trade is no longer limited to the export, but has become even more diverse, encompassing trade, cross-border cooperation, the establishment of alliances or subsidiaries, branches and joint ventures abroad .

The mode of internationalization of SMEs differs according to their business, their size, sector and how they perceive the opportunities and threats of free trade.

A significant proportion of SMEs with foreign suppliers does not necessarily equate to a significant proportion of SMEs exporting. From the graph in four relatively small countries (Liechtenstein, Luxembourg, Denmark and Austria), over 30% of SMEs export. Among the most export-oriented nine countries (with a share of exporting SMEs more than 20%), there is one big country: Germany.

One can also say that the size of the domestic market is a factor for internationalization.SMEs with a specialized production or large-scale production quickly concluded that the demand on the domestic market is insufficient to build a solid company. Trends in increased specialization are likely to push more SMEs to engage in free trade.

Tags: specialized production, Free trade, niche products

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