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The European Union (Eu) Vs The North American Free Trade Agreement

3368 words - 13 pages

The European Union (EU) vs the North American Free Trade Agreement

Introduction

The European Union (EU) is the organization which integrates the countries listed below, both politically and economically. It is a customs union, which is an agreement amongst a group of countries to eliminate trade barriers between them on the movement of goods, services, labor and capital, and also to establish a common external tariff on goods and services coming into the union. The EU evolved from the European Coal and Steel Community (ECSC), which was formed in 1951 as a response to the First and Second World Wars to try to ensure future peace in Europe. This became the European Economic Community (EEC) in 1965, which in turn became the European Union in 1992 following the signing of the Maastricht Treaty.

The North American Free Trade Agreement (NAFTA) has brought economic growth and rising standards of living for the people of all three member countries since 1994. As well, by strengthening the rules and procedures governing trade and investment throughout the continent, NAFTA has proved to be a solid foundation for building Canada’s future prosperity. NAFTA has enabled both Canada and Mexico to increase their exports to the United States: Canadian manufacturers now send more than half their production to the U.S., while Mexico’s share of the U.S. import market has almost doubled from 6.9% in pre-NAFTA 1993 to 11.6% in 2002. Manufacturers in all three countries are better able to realize their full potential by operating in a larger, more integrated and efficient North American economy. In 2002, Canada was the most important destination for merchandise exports from 39 of the 50 U.S. states.

Relevant Sections

Trading Blocs

Trade bloc activities have political as well as economic implications. For example, the European Union, the world’s largest trading block, has harbored political ambitions extending far beyond the free trading arrangements sought by other multistage regional economic organizations (Gibb and Michalak 1994: 75). Indeed, the ideological foundations that gave birth to the EU were based on ensuring development and maintaining international stability, i.e., the containment of communist expansion in post World War II Europe (Hunt 1989). The Maastricht Treaty which gave birth to the EU in 1992 included considerations for joint policies in regard to military defense and citizenship.

Trading blocs could strongly affect a company's investment decision. This particular trading bloc development prompted Ford to realise it could consider Europe to be one common market rather than a collection of individual markets. In 1967, Ford changed its management structure to include its European operations under one umbrella organisation known as Ford Europe Incorporated. Its two large U.K. and German manufacturing centres remained an important dimension of the new strategy, but they were no longer considered separate, independently...

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