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European Union vs. North American Free Trade Zone Essay


Comparison and Contrast of NAFTA and the EU

Mutually beneficial cooperation among countries can be observed in all parts of the world. Thus, large western states that are part of the North American continent are members of NAFTA, and most of the countries of Europe are included in the European Union. They are similar in a few moments. For instance, these organizations are associations establishing economic relations and trade (Beghin, Bureau, & Gohin, 2017). In addition, both these unions include several countries that regularly cooperate (Allee, Elsig, & Lugg, 2017). Nevertheless, there are more differences between NAFTA and the EU than similarities.

Firstly, in the EU countries, there is a single tariff for goods and services, while the countries in NAFTA are united only by trade relations (Beghin et al., 2017). Secondly, the currency of the EU is single, and the Western alliance has no such feature. Thirdly, the EU Parliament is the central authority of the Union, while the NAFTA countries have separate governments (Karemera, Whitesides, & Smalls, 2017). Fourthly, the EU is much smaller in size than NAFTA (the eastern association has an area of ​​4.4 million square kilometers, and the western union is 21.8 million square kilometers) (Beghin et al., 2017, p. 324). Also, the EU is deeply integrated into all the spheres of life and has a single mechanism for controlling the movement of financial assets, enterprise profits, resource allocation, etc. NAFTA does not have such features. The EU has a special form of organization with the management, headquarters, and official representatives in all the countries included in the union, and NAFTA is exclusively trade integration without any institutional branches. Therefore, differences prevail over similarities.

The article by Mayeda (2018) describes the recent events related to NAFTA and presents scenarios for the development of the countries’ economies that make up the union’s structure. Recently, there has been an active discussion of the topic that the US is about to leave the association. If the division of the commonwealth happens, it will unambiguously change my opinion about the NAFTA union as this organization has always been considered quite strong and reliable. However, if it loses its leader, the very essence of the union will most likely be meaningless, and the association will not be able to exist.

Mexico’s GDP and Approaches to Calculations

Mexico is the country that is included in the NAFTA association and closely cooperates with many countries of the world and the North American continent in particular. In order to assess the strength of this country’s economy and determine its competitiveness in the world market, it is possible to resort to such a value as the gross domestic product (GDP). Moreover, for comparison, the US parameter can be given since the economy of this country is the strongest in the world (Castañeda, 2014). Therefore, the contrast can help give as evident differences as possible.

To calculate GDP, economists resort to several approaches. For example, they calculate this parameter from the point of view of the mass fraction expressed in percent. Also, this indicator can be estimated in more real figures, namely, in the US dollars, the most stable and popular currency. Thus, when looking at the data of Mexico, the results for the past 2017 are not the worst. The mass share of the Mexican GDP is 1.72%, and regarding money, this amount is 1.0824$ trillion (Srithongrung & Sánchez-Juárez, 2015, p. 14). The figure is significant enough; nevertheless, when comparing these data with the US ones, the difference is essential.

According to the information of 2017, America’s GDP was 18.1247$ trillion, which exceeds the Mexican figure by almost eighteen times (Srithongrung & Sánchez-Juárez, 2015, p. 15). In addition, according to the analysis of these data, the annual growth of this figure is about 2.2%, and the rate per person is $ 55,000, which is also quite a lot (Srithongrung & Sánchez-Juárez, 2015, p. 15). The Mexican economy is far from being the last in the world concerning GDP; however, it is unlikely to catch up with the United States in this parameter.

References

Allee, T., Elsig, M., & Lugg, A. (2017). Is the European Union trade deal with Canada new or recycled? A text-as-data approach. Global Policy, 8(2), 246-252.

Beghin, J. C., Bureau, J. C., & Gohin, A. (2017). The impact of an EU-US Transatlantic Trade and Investment Partnership Agreement on biofuel and feedstock markets. Journal of Agricultural Economics, 68(2), 321-344.

Castañeda, J. G. (2014). NAFTA’s mixed record: The view from Mexico. Foreign Affairs, 93(1), 134-141.

Karemera, D., Whitesides, L., & Smalls, G. (2017). The impacts of regional free trade agreements and exchange rate volatility on world vegetable and fruit trade flows. International Journal of Food and Agricultural Economics, 5(4), 25-39.

Mayeda, A. (2018). Nafta’s dead. Long live Nafta. A look at likely outcomes. Web.

Srithongrung, A., & Sánchez-Juárez, I. (2015). Fiscal policies and subnational economic growth in Mexico. International Journal of Economics and Financial Issues, 5(1), 11-22.

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IvyPanda. (2020, September 2). European Union vs. North American Free Trade Zone. Retrieved from https://ivypanda.com/essays/european-union-vs-north-american-free-trade-zone/

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1. IvyPanda. "European Union vs. North American Free Trade Zone." September 2, 2020. https://ivypanda.com/essays/european-union-vs-north-american-free-trade-zone/.


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IvyPanda. 2020. "European Union vs. North American Free Trade Zone." September 2, 2020. https://ivypanda.com/essays/european-union-vs-north-american-free-trade-zone/.

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IvyPanda. (2020) 'European Union vs. North American Free Trade Zone'. 2 September.

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