Proposed Free Trade Areas - there are many proposals for establishing free trade

Question

Proposed Free Trade Areas - there are many proposals for establishing free trade areas in Asia or the Americas. The US has completed free trade agreements with a number of countries (see USTR web site); there is a free trade area among some countries in South America (Mercosur); etc. What are these proposals and what problems do they face? How will they affect the U.S.?; how will they affect countries that are not part of the free trade area? Are there any additional difficulties in enforcing free trade rules when economies in which the central government plays a large role are part of the free trade area? How have the various free trade agreements into which the U.S. has entered affected trade among the participating countries and employment in each country?

Explanation / Answer

US has developed a free trade area with Canada and Mexico known as the NAFTA, for the North. Similarly, Brazil proposed the evolution of a regional customs union called Mercosur, for the South.

Currently, Mercosur has come to a halt since trade within Mercosur is not growing at all. The rules of the customs union are more than often protectionist against imports from non-members. This is the answer toe question that how they deal and interact with other nations. They are actually hostile to trade liberalization.

There are many additional difficulties in enforcing free trade rules when economies in which the central government plays a large role are part of the free trade area. Those governments are often biased towards domestic producers and try to impose restrictions on free trade.

US has entered at least 16 free trade agreements with 20 countries and they all have affected positively to the US and its trade. In some countries there is a precise increase in employment while in some, the net effect is ambiguous.

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