Eu vs Nafta

1729 Words Jul 25th, 2013 7 Pages
Abstract
The paper addresses important concerns of the European Union and the NAFTA, NAFTA’s functional structure. A brief introduction if NAFTA and EU confront one another.
Executive Summary
Some would doubt that the formation of NAFTA was the American response to the European Single Act that formed the EU, which is made up of 27 countries. There is nothing to gain for both the blocs. However in some areas, “peaceful co-existence” and some form of “stricter ties” between the EU and NAFTA would prove to be beneficial for both.
Introduction
The NAFTA and the European Union comprising of 27 countries comprise the biggest blocs in the world. The two trade blocs are also highly interdependent through foreign direct investment. In 2007,
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The Euro was approved for equity and debt trading, bank transactions, business-to-business and payments by cheque. The euro transformed Europe (Warner, 1998) from “a jigsaw of costly protected markets into a vigorously competitive economic bloc, thereby enhancing international trade in the area”.
The NAFTA: A Regional agreement without institutions
NAFTA represents a market of 379 million people with $6.5 trillion in production. The drive behind NAFTA was the establishment of a free trade area. Despite being a trilateral, it aimed at increasing international trade through the elimination of trade barriers. NAFTA could become more competitive in the world economy.
The primary purpose of NAFTA is to assist the North American region in becoming more economically competitive with the rest of the world. It consists of US, Canada and Mexico. They set the rules regarding trade, investment and the provision of services. Despite the fact that free trade provides benefits, removing a trade barrier could cause damages to the shareholders and employees of the industry. The groups that get affected by foreign competition use politics to get protection from imports.

E.g. According to the U.S. International Trade Commission, US gaining from removing trade restrictions on textiles and apparel would have been nearly $12 billion in 2002.
The EU has become more economically integrated by becoming a common market. This removes barriers to production, like capital and labor.

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