There are many factors that a businessman should consider upon deciding where to export his products: market size and demand or economic stability of the country. However, all this information is secondary if the access conditions of the selected market are highly restrictive. For example, if the country where he wishes to export has high import tariffs or if the phytosanitary standards exceed the regular standards, maybe this market is not a good option, despite its demand or stability.   

A document from the Inter-American Investment Corporation (IIC) explains the factors that should be considered by a businessman to evaluate the selected market conditions and also proposes tools to compare the options offered by the target and alternative market.  

According to the IIC, “a very important condition for participating in the international market is to know the integration agreements between the country of origin and the target country of the exportable product. It is important to know these agreements in order to integrate each company’s potential with the real possibilities in the agreements.”  It is also an important component for analyzing the competition.”

According to IIC, there are five relevant treaties for the access of products from a firm to another country: 

• Preferential trade agreements: these agreements provide tariff reductions among member countries. 
• Free trade zones: these treaties provide for the elimination of tariffs between nations within a trade bloc. 
• Customs union: in these agreements, tariffs are eliminated among members, and common external tariffs are established. 
• Common market: in addition to the features of the customs unions, it also includes the free movement of factors of production, especially labor and capital.  
• Economic unions: it is the final phase of integration, including the coordination of macroeconomic policies, a common monetary system and common currency.  

The IIC suggests that these agreements offer benefits to companies wishing to work in the respective markets. From an external standpoint, they generate a greater power of negotiation and a greater capacity for attracting international resources and reinvestments. “The latter, -indicates IIC-, is very much related to the capacity of the internal markets, the effective population demand and the historical stability of external financial flows.” From an internal standpoint, trade agreements enable a higher use of scale economies in the production, since they produce expansion in the effective market. Also, economic vulnerability is reduced, especially due to external factors. These rules become clear in issues such as antidumping, smuggling, para-tariff restrictions, etc. For small and medium enterprises (SMEs), the option of trading in expanded markets under trade agreements is the way of “having clear rules and have markets open up, especially in terms of associativity, indirect exports or joint ventures.” 

National level

At a local level, access conditions are granted by three rules. In the first place, rules of origin that determine which country is considered as the producer of the goods in order to apply tariff preferences established in the international trade agreements. In second place, sanitary, phytosanitary and zoosanitary rules, compelling companies to take certain measures on products in regard to health care of persons, plants and animals in the country where the products are to be exported. In third place, it is possible to establish restrictions on access conditions through other technical standards, such as packaging or labeling requirements.  

Comparison tool

This chart prepared by the IIC helps businessmen compare access conditions to each market: