In the context of a free trade agreement (FTA) between the United States and a country with significantly different resources, the most likely outcome is that industries will increasingly focus on using interdependence.
This is because an FTA typically encourages countries to specialize in the production of goods and services for which they have a comparative advantage. As businesses in the U.S. learn to rely on goods, services, and raw materials from the trading partner, interdependence can grow. This could lead to greater efficiency and innovation, as producers may focus on their strengths while importing other products.
The other responses can also have some validity but are less directly aligned with the typical effects of such a treaty:
- Businesses offering less variety isn't a common outcome of free trade; rather, it often leads to greater variety due to increased competition and access to foreign products.
- Higher prices for consumers due to trade deficits can occur in some cases, but an FTA typically aims to lower tariffs and increase competition, which may actually reduce prices.
- While some producers may struggle in the face of competition from imported products, the overall effect of free trade usually leads to an adjustment rather than wholesale business closures, as companies adapt to new market dynamics.
Thus, focusing on interdependence is a key theme that aligns with the principles of free trade agreements.