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Trade Agreements Facilitate The Free Exchange Of Goods And Services Between Nation Countries

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Trade agreements facilitate the free exchange of goods and services between nation-states, and contribute to varying degrees to complete economic integration between two or more states. Autarky refers to a non-trading status, a phenomenon rarely seen in today’s increasingly integrated globe. The steps taken to fully integrate are referred to as stages, a categorization that makes evident the variability in degree of integration. At the first stage, a preferential trade area can be set up as a less formal means of encouraging trade by enacting preferential tariffs to target specific countries’ exports (usually developing countries), in addition to other unilateral trade benefits. Free trade areas are the next step up along the full…show more content…
NAFTA The North American Free Trade Agreement (NAFTA) is an agreement among Mexico, Canada, and the United States that removes trade tariffs between the three members. Along with the removal of tariffs, NAFTA created the Commission for Environmental Cooperation (CEC), which monitors the environmental impact of the agreement. NAFTA was signed on December 8, 1993 by the Clinton administration, and the agreement went into effect on January 1, 1994. NAFTA has significantly increased trade between the three countries. This agreement has increased exports for all countries, while making imports cheaper. For example, the US accounts for 50% of Mexico’s imports, and it accounts for 51% of Canada’s imports. The effects of NAFTA on the US economy were smaller than predicted, and its effect is hard to separate from the general boom of the US economy during the 1990s and early 2000s. While many jobs were created during this period, some critics argue that job creation and economic growth would have been even greater without NAFTA. Many economists have done studies to quantify the welfare effects of NAFTA on its member states. One 2015 study estimated the welfare effect of NAFTA on its member states. It found a welfare increase of 1.31% in Mexico, an increase of 0.08% in the US, and a welfare decrease of 0.06% in Canada. Although these effects are very modest, some argue that NAFTA has had more pronounced effects on specific sectors of these countries’
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