Regional Trading Agreements

Running head: REGIONAL TRADING AGREEMENTS
Regional Trading Agreements
Name of the Student
Name of the University
Author’s Note

1REGIONAL TRADING AGREEMENTS
The presence of many regional trading agreements can be seen in United States
(US) and one of them is NAFTA (North American Free Trade Agreement). This particular
regional trade agreement covers US, Canada and Mexico. Due to the effect of NAFTA, there
were elimination of all tariffs between US, Canada and Mexico (naftanow.org, 2019). This
trade agreement was signed on 17th December, 1992 and it was came into effect on 1st
January, 1994 (naftanow.org, 2019). NAFTA can be considered as a broad regional trade
agreement that is introduced for setting the rules of trading and investment between these
three countries (naftanow.org, 2019). It needs to be mentioned that the introduction of this
regional trade agreement has ensured the systematic elimination of both the tariff and non-
tariff barriers for free trading and investment between these countries (naftanow.org, 2019).
The introduction of NAFTA has many positive effects on the trading of US,
Canada and Mexico. As a result of the introduction of NAFTA, trading within North
America increased intensely. There is an increase of 150 per cent in the exports from US to
Mexico; and 66 per cent increase can also be seen in exports to Canada. At the same time, the
introduction of NAFTA has increased the imports of US from Canada and Mexico; and it is
more than the amount of increase (Caliendo&Parro, 2015). Moreover, since the introduction
of NAFTA, the trade deficit of US with its North American trading partners has increase
majorly. This increase in import in US has destroyed certain portion of job opportunity
because the significant portion of important displaces the scope to manufacture the goods in
the country by the domestic workers of US (Villareal& Fergusson, 2017). The introduction of
NAFTA has majorly benefitted Mexico as foreign investment into the country tripled due to
the rapid growth. However, there is not much development in the employment opportunity in
Mexico due to NAFTA (Villareal& Fergusson, 2017). Thus, it can be said that NAFTA had
produced a mixed result where these three countries have faced both benefits and
disadvantages in their trading.