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Regional integration is one-way countries can open up their borders and cooperate with each other to maintain stability. These agreements define the nature and extent of the cooperation. Regional trade is the most popular form of integration. This is often regulated through regional trade agreements, often between multiple governments. This paper will focus on three such agreements: the North American Free Trade Agreements (NAFTA), BREXIT Withdrawal Agreement, and the Trans-Pacific Partnership Agreements (TPP). It will highlight their strengths and drawbacks, as well as provide commentary and suggestions for improving them.
North American Free Trade Agreement (NAFTA).
NAFTA was established on January 1, 1994. The Agreement created the largest free trade zone in the world and was a landmark. It also included Canada, Mexico, and the United States (Congressional Research Service Report 2017, 2017). Although there have been many issues with the Agreement, the United States has pushed for its renegotiation. However, the 2017 Congressional Research Service Report found that NAFTA achieved several outstanding outcomes.
Advantages.
NAFTA member countries have seen their tariffs reduced or eliminated, which has led to a threefold increase in trade. The United States is more inclined to purchase oil from Mexico due to the lower tariffs. NAFTA has facilitated trade and the United States’ economy has grown by as much as 0.5% annually. Third, the NAFTA member countries have created new job opportunities. NAFTA’s free trade agreements with the United States have led to the creation of as many as 5.4 million new jobs.
These countries have seen more than triple their foreign direct investment since NAFTA was established. According to the 2017 Congressional Report, the United States has increased FDI by more than three times since 1993 when it was $69.9 billion. It is now $352.9 billion. In 2015, Mexico’s FDI rose from $15.2 billion to $104.4 billion. In the same time, Mexico increased its investment in the United States by 1283%, while Canada’s FDI grew by 911% (Kimberly A. 2020).
Disadvantages.
There are many disadvantages to the agreement but the most important is its impact on Mexico. Because of the free trade agreement, the United States was able to import heavily subsidized agricultural commodities into Mexico. This led to local farmers losing their livelihoods and inability to compete with cheaper products. This harsh reality was faced by more than one million Mexican farmers, according to the Economic Policy Institute. This had a ripple effect in that these farmers were forced to illegally travel to the United States in search of work. This led to an increase in illegal immigrants arriving in the U.S.A from Mexico.
The BREXIT Withdrawal Agreement.
The Agreement came into effect on February 1, 2020. It includes two major agreements: The Withdrawal Agreement, which includes a Protocol on North Ireland & Ireland as well as a Political Declaration that outlines the structure of future relations between the European Union & the United Kingdom. It has been acknowledged for taking into account many aspects.
Advantages.
The United Kingdom guarantees the protection of the rights of citizens from the European Union who live in the United Kingdom. This includes the right of them to stay and build their communities. (European Commission). A transition period allows for further negotiations to reach fair terms for the interaction between the European Union states and the United Kingdom. A financial settlement is included in the Agreement that guarantees that both parties fulfill the obligations they agreed to while the U.K. was still a member of the E.U. member.
Disadvantages.
The Agreement includes a financial settlement of 33 billion pounds. These payments will be made to the European Union by the United Kingdom. (U.K. Parlament, 2019). Apart from goods on transit or already ordered, the Agreement imposes tariffs upon each other’s imports. A customs and regulatory frontier is also to be established (Janet B. J. 2020).
Trans-Pacific Partnership Agreement.
TPP was an agreement that would have allowed 12 countries to join together, including the United States of America, New Zealand and Australia, Brunei and Mexico, Brunei and Chile, Canada and Vietnam. It was signed by these countries in February 2016, but it did not become effective as the United States withdrew their signature in January 2017. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership was negotiated by the rest of the countries. It was made binding on December 30, 2018.
Advantages.
The CPTPP’s most notable features include the fact that it covers many goods and services such as telecommunications and financial services. It also includes food safety standards. It also calls for all members to end wildlife trafficking. Non-compliance countries will be penalized (Kimberly and A. 2019). It is also open to accepting additional members, including China, if they show interest. The goal is to create a larger area than the North American Free Trade Area.
Disadvantages.
CPTPP advocates for a free-trade area. This is detrimental to low-income countries due to factors like dumping and unfair competition due subsidization.
Recommendation.
Trade agreements are often the result of negotiations and bargains. The takeaway is that in the event of unfavorable effects, specific elements of the Agreement should either be renegotiated or referred to the dispute resolution bodies within the system.