The influence of the free-trade zone on the economy and relations between its member states: on the example of USMCA
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Аннотация
Introduction 4
Chapter 1. The history of the creation of a free-trade zone agreement between the
USA, Canada and Mexico: from NAFTA to USMCA 13
1.1. The history of the signing of NAFTA and the main results of this
agreement 13
1.2. The revision by the United States of trade agreements under President Donald
Trump 19
Chapter 2. Positive influence of NAFTA and USMCA on the economy and relations between their member states 25
2.1. Positive influence of NAFTA and USMCA on the economy and relations
between the United States and Canada 25
2.2. Positive influence of NAFTA and USMCA on the economy and relations
between the United States and Mexico 31
Chapter 3. Negative influence of NAFTA and USMCA on the economy and relations between their member states 37
3.1. Negative influence of NAFTA and USMCA on the economy and relations
between the United States and Canada 37
3.2. Negative influence of NAFTA and USMCA on the economy and relations
between the United States and Mexico 41
Conclusion 50
Bibliography 54
Introduction 4
Chapter 1. The history of the creation of a free-trade zone agreement between the
USA, Canada and Mexico: from NAFTA to USMCA 13
1.1. The history of the signing of NAFTA and the main results of this
agreement 13
1.2. The revision by the United States of trade agreements under President Donald
Trump 19
Chapter 2. Positive influence of NAFTA and USMCA on the economy and relations between their member states 25
2.1. Positive influence of NAFTA and USMCA on the economy and relations
between the United States and Canada 25
2.2. Positive influence of NAFTA and USMCA on the economy and relations
between the United States and Mexico 31
Chapter 3. Negative influence of NAFTA and USMCA on the economy and relations between their member states 37
3.1. Negative influence of NAFTA and USMCA on the economy and relations
between the United States and Canada 37
3.2. Negative influence of NAFTA and USMCA on the economy and relations
between the United States and Mexico 41
Conclusion 50
Bibliography 54
The number of free-trade zones is growing all over the world. Countries joining a free-trade zone expect trade growth with their trade partners, an increase in foreign investment and, in general, an acceleration of their economies and improved relations with each other. However, joining a free-trade zone, any country should be aware that a number of problems associated with this membership may come along with it. This Master’s thesis contains the analysis of the influence of a free-trade zone on the economy and relations between its member-countries on the example of the USMCA. Moreover, the author of this work also pays attention to the North American Free Trade Agreement (NAFTA), since USMCA (also referred to as NAFTA 2.0) is the successor to NAFTA. Therefore, when analyzing USMCA, it is also necessary to take into account the results of NAFTA, since the current trade agreement between the United States, Canada and Mexico has a lot in common with its predecessor. USMCA covers various issues such as labor, the protection of intellectual property, environment, digital trade, the creation of an investment regime and so on. For the United States, which is one of the leading economies in the world, and for Canada and Mexico, membership in such a large integration as USMCA brings a number of advantages and disadvantages that we disclose in this work.
The relevance of this topic is due to the fact that more countries are becoming members of economic integration associations, which can affect the economy and relations between these countries. Considering the example of the USMCA, we can draw certain conclusions how free-trade zones affect the countries that are their members. However, we recall the European Union (EU) as a successful example of such an integration association. Nevertheless, the integration association between the United States, Canada and Mexico is of greater interest to the author of this work than the EU, since the USMCA still has to develop further in order to reach the level of integration of the EU. In addition, the United States, which sees itself as a leader in the world arena, is a member of USMCA, so it is interesting for the author to consider how the country copes with the problems that arise between the U.S. and its trade partners within this free-trade zone.
The scientific novelty of this work lies in the analysis of the economy and relations between the United States, Canada and Mexico in the framework of the new agreement USMCA, which entered into force in 2020. The author analyzes the main clauses of the USMCA, which were changed or added according to current interests of the member states of this agreement, and also analyzes the first results of the updated trade agreement between the United States, Canada and Mexico.
Object of the thesis is the free trade zone agreement the USMCA.
Subject of the research is the influence of the USMCA on economy and relations between the US, Canada and Mexico.
The aim of the work is to identify the main trends in the implementation of the USMCA (and before it NAFTA) free trade agreement that contribute to the development of economy and relations between the US, Canada and Mexico.
The objectives of the research are:
1. Describe the history of the creation of NAFTA and results of the agreement for its member states.
2. Analyze former American President Donald Trump's policy towards U.S. main trade agreements.
3. Identify positive trends in the economy and relations between the U.S. and Canada under NAFTA and USMCA.
4. Identify positive trends in the economy and relations between the U.S. and Mexico under NAFTA and USMCA.
5. Reveal the negative influence of NAFTA and USMCA on the economy and relations between the U.S. and Canada.
6. Reveal the negative influence of NAFTA and USMCA on the economy and relations between the U.S. and Mexico.
According to the aim and objectives of the study, the following methods were identified:
• Content analysis to structure of information and examine of the meaning of the content of publications, reports and articles on the topic. The use of content analysis made it possible on the basis of identification of keywords of certain researches devoted to NAFTA and USMCA to analyze the presence, meanings and relationships of certain words. The author identifies the main pros and cons of the agreements with the help of the content analysis. Among the frequent advantages, the authors of these researches noted: digital trade, the growth of foreign direct investment in the USMCA countries, the growth of trade between members of this free trade zone. Among the disadvantages are: migration problems, the U.S. influence on its trading partners, trade disputes between the U.S. and Canada;....
The relevance of this topic is due to the fact that more countries are becoming members of economic integration associations, which can affect the economy and relations between these countries. Considering the example of the USMCA, we can draw certain conclusions how free-trade zones affect the countries that are their members. However, we recall the European Union (EU) as a successful example of such an integration association. Nevertheless, the integration association between the United States, Canada and Mexico is of greater interest to the author of this work than the EU, since the USMCA still has to develop further in order to reach the level of integration of the EU. In addition, the United States, which sees itself as a leader in the world arena, is a member of USMCA, so it is interesting for the author to consider how the country copes with the problems that arise between the U.S. and its trade partners within this free-trade zone.
The scientific novelty of this work lies in the analysis of the economy and relations between the United States, Canada and Mexico in the framework of the new agreement USMCA, which entered into force in 2020. The author analyzes the main clauses of the USMCA, which were changed or added according to current interests of the member states of this agreement, and also analyzes the first results of the updated trade agreement between the United States, Canada and Mexico.
Object of the thesis is the free trade zone agreement the USMCA.
Subject of the research is the influence of the USMCA on economy and relations between the US, Canada and Mexico.
The aim of the work is to identify the main trends in the implementation of the USMCA (and before it NAFTA) free trade agreement that contribute to the development of economy and relations between the US, Canada and Mexico.
The objectives of the research are:
1. Describe the history of the creation of NAFTA and results of the agreement for its member states.
2. Analyze former American President Donald Trump's policy towards U.S. main trade agreements.
3. Identify positive trends in the economy and relations between the U.S. and Canada under NAFTA and USMCA.
4. Identify positive trends in the economy and relations between the U.S. and Mexico under NAFTA and USMCA.
5. Reveal the negative influence of NAFTA and USMCA on the economy and relations between the U.S. and Canada.
6. Reveal the negative influence of NAFTA and USMCA on the economy and relations between the U.S. and Mexico.
According to the aim and objectives of the study, the following methods were identified:
• Content analysis to structure of information and examine of the meaning of the content of publications, reports and articles on the topic. The use of content analysis made it possible on the basis of identification of keywords of certain researches devoted to NAFTA and USMCA to analyze the presence, meanings and relationships of certain words. The author identifies the main pros and cons of the agreements with the help of the content analysis. Among the frequent advantages, the authors of these researches noted: digital trade, the growth of foreign direct investment in the USMCA countries, the growth of trade between members of this free trade zone. Among the disadvantages are: migration problems, the U.S. influence on its trading partners, trade disputes between the U.S. and Canada;....
The NAFTA trade agreement has existed for more than 20 years, and the precondition for its signing was the 1989 free-trade agreement between the United States and Canada. At the same time, Mexico, which was experiencing economic problems, decided to liberalize its economy and joined the trade agreement with the US and Canada, which led to NAFTA. When NAFTA went into effect in 1994, the United States decided to create an FTA throughout the Western Hemisphere (FTAA), including the NAFTA countries and Latin American countries, except Cuba. However, a number of Latin American countries were concerned that this trade agreement was an instrument of influence of the United States on their economy and policy, so the FTAA project was abandoned. We reckon that the Latin American countries saved their agricultural sectors by not joining the NAFTA free-trade zone. Despite the success of NAFTA, we can notice on the example of the FTAA that some countries did not agree with competition with the U.S. producers, as well as with the influence of the United States, which we also noted in this work among the disadvantages of NAFTA and USMCA.
The results of NAFTA were: lowering tariffs on trade in goods between its members, developing mutual trade, attracting investors, developing common laws, creating jobs in Mexico in the industrial sector, etc. Before the signing of NAFTA, there were many American factories in Mexico, with the signing of the Agreement, American production in the developing country increased even more due to relatively cheap labor there. This phenomenon became particularly noticeable in the automotive sector.
When Donald Trump became the President of the United States in 2017, he announced number of changes in some trade agreements of the U.S. Trump abandoned the idea of creating the Transatlantic Trade and Investment Partnership, a trade agreement between the U.S. and the EU, the development of which began under former US President Barack Obama. Trump considered TTIP irrelevant and unprofitable for the United States. Another trade agreement, the Trans-Pacific Partnership, was signed by the U.S. in 2016, but in 2017 Trump announced the withdrawal of the United States from the agreement. Despite the possible benefits of TPP, Trump was worried that it would further worsen the situation with the decrease of American production. Thus, Trump decided to focus on revising NAFTA.
The leadership of the United States is reflected in many aspects of relations with Canada and Mexico. Canada and Mexico expressed their dissatisfaction with the news that Trump was going to renegotiate NAFTA, but on this issue the United States took a strict position, not taking into account the opinions of its NAFTA partners. Trump's worries about the lack of sufficient production in the United States, as well as the massive migration from Mexico and etc., seemed to him the results of NAFTA. Canada and Mexico decided to sign a new trade agreement with the United States after Trump imposed duties on aluminum and steel from these countries, which shows that the United States put pressure on its trading partners.
Thanks to NAFTA, mutual trade between the U.S. and Canada is balanced. If we talk about the advantages of USMCA, this agreement contains a number of new chapters that are aimed at improving relations between these two countries. So, as it seems to us, a very important chapter of the USMCA is the chapter “Digital trade”, which forms common laws in order to create favorable conditions for trade in e-books, videos, music, software and games. Moreover, Canada expects that USMCA will have a positive impact on the development of small businesses, which plays an important role in its economy. A relatively new chapter was added in USMCA, it is the chapter devoted to the environment. NAFTA had only a separate annex devoted to the environment, but now it seems that the countries of this free trade area, first of all, the United States, have seriously thought about this urgent problem. The USMCA prohibits commercial finning of whales and sharks. Also this chapter is aimed at combating air and water pollution.....
The results of NAFTA were: lowering tariffs on trade in goods between its members, developing mutual trade, attracting investors, developing common laws, creating jobs in Mexico in the industrial sector, etc. Before the signing of NAFTA, there were many American factories in Mexico, with the signing of the Agreement, American production in the developing country increased even more due to relatively cheap labor there. This phenomenon became particularly noticeable in the automotive sector.
When Donald Trump became the President of the United States in 2017, he announced number of changes in some trade agreements of the U.S. Trump abandoned the idea of creating the Transatlantic Trade and Investment Partnership, a trade agreement between the U.S. and the EU, the development of which began under former US President Barack Obama. Trump considered TTIP irrelevant and unprofitable for the United States. Another trade agreement, the Trans-Pacific Partnership, was signed by the U.S. in 2016, but in 2017 Trump announced the withdrawal of the United States from the agreement. Despite the possible benefits of TPP, Trump was worried that it would further worsen the situation with the decrease of American production. Thus, Trump decided to focus on revising NAFTA.
The leadership of the United States is reflected in many aspects of relations with Canada and Mexico. Canada and Mexico expressed their dissatisfaction with the news that Trump was going to renegotiate NAFTA, but on this issue the United States took a strict position, not taking into account the opinions of its NAFTA partners. Trump's worries about the lack of sufficient production in the United States, as well as the massive migration from Mexico and etc., seemed to him the results of NAFTA. Canada and Mexico decided to sign a new trade agreement with the United States after Trump imposed duties on aluminum and steel from these countries, which shows that the United States put pressure on its trading partners.
Thanks to NAFTA, mutual trade between the U.S. and Canada is balanced. If we talk about the advantages of USMCA, this agreement contains a number of new chapters that are aimed at improving relations between these two countries. So, as it seems to us, a very important chapter of the USMCA is the chapter “Digital trade”, which forms common laws in order to create favorable conditions for trade in e-books, videos, music, software and games. Moreover, Canada expects that USMCA will have a positive impact on the development of small businesses, which plays an important role in its economy. A relatively new chapter was added in USMCA, it is the chapter devoted to the environment. NAFTA had only a separate annex devoted to the environment, but now it seems that the countries of this free trade area, first of all, the United States, have seriously thought about this urgent problem. The USMCA prohibits commercial finning of whales and sharks. Also this chapter is aimed at combating air and water pollution.....
