Final exam preparation
NAFTA is one of the forms of preferential trade arrangements, which is known as free-trade areas. In 1994 the United States, Canada, Mexico formed the North American Free Trade Agreement. Tariffs among them equals 0; trade in service liberalized and restrictions on investment flows have been relaxed. In 2008 NAFTA countries completed the process of establishing virtual free trade in almost all goods and services among themselves. NAFTA second largest preferential trade agreement in the world
EU is the other form of preferential trade arrangements which is called custom unions, which combined 27 countries and is currently the world largest CU. The European Union was founded in 1957 as a custom union agreement among six countries. Since that time 21 more countries were added to EU. The ultimate goal of the member countries is to achieve a level of integration so complete that the EU becomes a “united states of Europe”. EU put in place a government to operate its common agricultural and commercial policies. In 1980 EU enacted the Single European Act, the goal of which to develop a uniform system of product standards for the member states and to remove a wide range of physical, technical, and fiscal barriers that impinge on the free flow of goods and services of EU members. Also EU liberalizes intraunion migration of labor and capital. In 1999 launched Euro as a common currency of 15 from 27 members.
The basic difference between NAFTA and EU is how the member countries treat nonmember countries. In particular CU (EU) is an association of countries that agrees to eliminate barriers to trade among its members and to form a common barrier against nonmember countries, while FTA (NAFTA) also agree to eliminate trade barriers among themselves however they maintain their own individual trade barriers against nonmember countries.
In the United States NAFTA remains very controversial. Some leading politicians opposed the agreement as well as labor unions and certain environmental groups. The answer why NAFTA