The Consequences of Cancelling Bilateral Trade Agreements

Added on - 21 Apr 2020

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THE CONSEQUENCES OFCANCELLING BILATERAL AND MULTILATERALTRADE AGREEMENTS IN FAVOR OF A PROTECTIONIST TRADE POLICY INUNITED STATES OF NORTH AMERICA
TABLE OF CONTENTSIntroduction......................................................................................................................................3Main body........................................................................................................................................3United States of North America..................................................................................................3Free Trade Agreement (North- American)..................................................................................4Debate over the cancellation of bilateral and multilateral trade agreements...............................4Consequences of decision on bilateral agreement in mid as well as long term...........................5Consequences of decision on multilateral agreement in mid as well as long term.....................7Future aspects of NAFTA..........................................................................................................10References......................................................................................................................................12
INTRODUCTIONAccording toPicciotto (2016), trade agreement comprises a broad range including tax, tariff andtrade treaty and investment guarantees. Bilateral agreements are agreed between two countriesand multilateral countries are contracted between more than two countries. Presently, thepresident of North America has proposed to cancel trade agreements in order to protectionisttrade policy. The below report present discussion and analysis on same topic. Further, a detailassessment of mid-term and long-term consequences of the decision has been presented in detail.Lastly, the overall impact of the decision has been concluded that necessity of renegotiating theterms of trade is required in order to sustain the economic growth of United States of NorthAmerica(Aggarwal, 2013).MAIN BODYUnited States of North AmericaAs perCooper (2014), the US economy is a mixed economy which is highly developed ascompared to other countries. It is considered to be the largest economy of the world in terms ofits nominal GDP, and it is the second largest with regard to its purchasing power parity (PPP). In2016, the U.S. GDP was anticipated to be $18.46 trillion (Villareal, 2017). The country has theseventh-highest per capita GDP (nominal) in the world, and it is ranked as a country with theeleventh-highest per capita GDP (PPP). The most used currency in international transactions isthe U.S. dollar. It is the world's leading reserve currency which is backed by science andtechnology. The US government has a high probability to reimburse its debts. The economy hasplayed a central role in various international institutions since World War II. Many countries ofthe world use US dollar as their official currency, and in many other countries, the currencyserves as de facto currency. The largest trading partners of the country are Mexico, China, Japan,Canada, Germany, United Kingdom, South Korea, India, France and Taiwan. The economy isboosted by the availability of plentiful natural resources, a well-developed infrastructure, andhigh productivity. The country has second highest net estimated value of natural resources whichwere valued at $45 trillion in 2016(Komar, 2016). The Americans have the highest householdand employee income among other nations.
Free Trade Agreement (North- American)According to the words ofMoser (2014), free Trade agreement is usually contracted toliberalize the terms and policies of trade and to boost the economic growth of the countriesindulged in the agreement. NAFTA which stands for North American Free Trade Agreementis a 3rdcountry accord agreed by the Canadian, Mexican and US government that come intoexistence in January 1994. Terms and conditions of NAFTA were regularly adopted byJanuary 2008, the same offered for the abolition of product traffic operated around these 3countries(Rugman, 2017). Trade liberalization regarding textiles, manufacturing ofautomobiles, agriculture was the main consideration. The agreement also required tosafeguard property and set-up disputeresolution system and via side deals, adopt labour andenvironmental protection.NAFTA primarily restructured relations of the North Americaneconomy, driving an exceptional incorporation among developed economy of US andCanada, Mexico (developing country).As per the words of Lester (2016), NAFTA took pleasure from the bipartisan backing, beennegotiated by the George H.W. Bush (President) and further approved it through Congress andadopted by the President Bill Clinton of democracy. It promoted approximately thrice thelocaltrade and investments across the board among the 3 countries also developed considerably.However, NAFTA remained at a constant target in the wider debate on the free trading.DonaldJ. Trump (President) stated that the agreement had passed job, production andmanufacturing in the United States to Mexico. During August 2017 his managementre-opened Canadian and Mexican negotiations with the purpose of restructuring it(Caliendo,2015).Debate over the cancellation of bilateral and multilateral trade agreementsAccording to the views ofLim (2015),the NAFTA negotiations started in 1991, the objective ofthese specified countries was the incorporation of Mexico with highly employed and developedUS and Canada economy. They believe that the free trading would pass more strong and steadygrowth in the economy to Mexico, offering opportunities and work for increasing humanresource.For US and Canada, Mexico was considered to be a promising new market forabroad selling, and reduced investment in cost location that ensure the U.S. and Canadiancompetitiveness of companies. Although in 1998 the US finished an agreement of trade with
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