On January 1, 1994, the United States, Canada, and Mexico came together and signed the North American Free Trade Agreement (NAFTA). This trade bloc aims to reduce trade restrictions among the three countries, thus encouraging investment and increasing market access. Under President Trump's administration, the three countries reached a new agreement called the United States-Mexico-Canada Agreement (USMCA) which replaces the former NAFTA. These two agreements have many similar points, yet several unique distinctions as well.
globalEDGE Blog - By Tag: trade-bloc
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On April 26, United States President Donald Trump announced plans to "re-negotiate" the terms of the North American Free Trade Agreement (NAFTA) with Canada and Mexico. As related in a White House press release, the administration had intended to completely withdraw the U.S. from the trade deal, but was dissuaded from doing following conversations with Canadian Prime Minister Justin Trudeau and Mexican President Peña Nieto. At present, NAFTA stands in its current form, although the U.S. has explicitly stated its desire for major changes to the trade deal. The situation is predictive of a potentially volatile future for NAFTA and trade relations between the U.S., Canada, and Mexico.
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In part three of this week's trade bloc series, we are taking a look at CEFTA.
Historically, the Visegrad Group, Czech Republic, Hungary, Poland, and Slovakia, were at the cross roads of trade in Central Europe. The Central European Free Trade Agreement (CEFTA) was initially established in December 1992 as a free trade agreement by the Visegrad group, with the goal of eventually further integrating into political, economic, legal, and security of institutions in Western Europe. Currently, Albania, Bosnia and Herzegovina, Macedonia, Moldova, Montenegro, and Kosovo are parties to the CEFTA agreement. Due to changes of the agreement in 2006, memberships are ended once member states of CEFTA are accepted into the European Union, and Balkan states are now covered by CEFTA.
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This week, the globalEDGE blog will be taking a look at various trade blocs around the world, focusing on smaller blocs you might not have heard of. Following the end of World War II, trade agreements became common throughout much of the world. European states began to look for ways to increase trade between themselves, states in South-East Asia saw cooperation as a way to increase economic growth among all members, and Arab nations looked to unify to better market their natural resources. Trade agreements can help smaller countries have more of a say in the global economy, and help encourage exporting for local businesses.
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Are you interested in learning more about the value of imports, exports, and FDI flows of each trade bloc? Financial and trade statistics for all the trade blocs have been updated on globalEDGE. You can browse each trade bloc and learn more about the total amount of intra-trade, the value of exports/imports, FDI inflows and outflows, and the balance of payments of each trade group. By clicking any row of data, you can display a graph of the 5 most recent years of data available, in order to view any short to medium-run trends. Also, you can view where each trade block ranks compared to the rest by clicking on the magnifying glass icon next to the data. Check out the updated European Union statistics page!
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International trade has become a negative phenomenon in the US election cycle in 2016 as well as influenced the BREXIT. Last year, on October 5, 2015, US President Obama used the “fast track powers” granted to him by Congress to seal the Trans-Pacific Partnership agreement. TPP involves the US and 11 Pacific nations that encompass 40% of global trade (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, US, and Vietnam).
But is US trade a lost cause and is the signing of TPP too late to be helpful for US trade? The US share of the Asia-Pacific region’s imports declined about 43% from 2000 to 2010. Gaining that back would mean an additional $600 billion annually by 2020, supporting some 3 million US jobs. Now, other countries are exporting much more to these countries, and at an increasing rate. Why is that?
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The globalEDGE team is excited to announce that we have successfully added new trade blocs, as well as redesigned the layout for many of the sections related to trade blocs. If you look at the Global Insights by Trade Bloc page, you will notice that there are 10 new trade blocs: ANCOM, APTA, the Arab League, CEFTA, EAC, EAEU, ECCAS, EFTA, OECS, and SAARC. By clicking on each individual bloc, you will also notice that we have redesigned the Introduction, History, Membership, Related Agreements, and Statistics pages. Users will now be able to gain an in-depth perspective of how much aggregated trade occurs because of these blocs, as well as how much each member country contributes to the bloc as a whole. Make sure to check out this new section today!
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The Arab League considers itself a loose confederation of 22 Arab nations, whose broad mission is to improve coordination and communication among its members in terms of common interest. The League was developed in response to concerns about post-war colonial territory divisions. The initial agreement was signed in Cairo on March 22, 1945 by representatives of the first six member states–Egypt, Iraq, Jordan, Lebanon, Syria, and Saudi Arabia, and there are indications that they will be signing another agreement on the basis of an Arab military force in the near future.
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On Monday, October 5, 2015, the Trans-Pacific Partnership (TPP) was officially signed into existence by the twelve Pacific Rim nations.The countries involved in the deal include the United States, Japan, Canada, Mexico, Australia, New Zealand, Chile, Peru, Malaysia, Vietnam, Singapore, and Brunei. China, the world's second-largest economy and the biggest trading partner for over half of the countries involved in the TPP, was not included in the list, and they are hesitant about showing support for the new deal.
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Following a shockingly strong win for the Conservative Party in the recent United Kingdom elections, re-elected Prime Minister David Cameron promised an "in-out referendum" on the future of the U.K.'s membership within the European Union before the end of 2017. The referendum has its roots in the understandably unpopular red tape and bureaucracy that affects British business prospects within the E.U., especially with regard to the trade bloc's employment laws and health and safety issues. In spite of this, Cameron's announcement was met by fairly strong opposition within a study surveying a grouping of Britain's most influential business leaders.
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There is a large trade agreement under negotiation involving major economies around the Pacific. The Trans-Pacific Partnership will include the major economies of Japan and the United States, while also including the following ten countries: Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. These twelve countries account for forty percent of global gross domestic product. It has been noted that China has been left out of this partnership because it has been criticized for not following trade rules. In the future, China will be able to join the partnership pending compliance to the Trans-Pacific Partnership’s standards.
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The European Union is in a metamorphic phase, as illustrated by globalEDGE’s various blog posts on the topic. The trade bloc is trying desperately to stabilize its currency, sustain healthy industry growth, and prevent Greece from defaulting on sovereign debt. These nations have remained resilient before and many economists believe they will stand the test of time, for there is strength in numbers. Six countries are currently in the process to become full-fledged members. One of the candidates is Iceland.
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As Africa becomes more integrated into global value chains, existing trade agreements are not enough to fulfill the increasing foreign investments because they are complex and obscure. With the hope of creating easier access to global market for local businesses, the three largest trade groups in Africa came up with the idea of the “African Free Trade Zone,” which aims to create a single trade union in Africa. The idea has been evaluated since 2008 and finally it will be realized later this month.
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Few things are more for the global economy than world trade. Ever since Adam Smith laid out the economics of comparative advantage in his magnum opus, The Wealth of Nations, countries have understood the importance of specialization and trade. The importance of trade remains the same today - if not more important.
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A few months ago, Zheng wrote a blog post about a possible Trans-Atlantic trade agreement. Recently, talks have been heating up between the United States and the European Union with negotiations on a trade deal likely to begin by the end of June. The free trade agreement, if passed, would remove tariffs and reduce other barriers to trade, spurring economic growth, exports and job creation for both parties. Given the stagnant state of the global economy, there is much excitement over a potential deal and optimism is high that an accord will be reached.