Suggest why different groups of people disagree about the need for trade blocs such as NAFTA
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Course
Unit 1 - Global Challenges
Institution
PEARSON (PEARSON)
A* essay answer for the exam question "Suggest why different groups of people disagree about the need for trade blocs such as NAFTA (10 marks)".
Written by an A* A level student who scored full UMS in their Geography exams as well as having several of their essays chosen as model answers by the...
Suggest why different groups of people disagree about the need for trade blocs
such as NAFTA (10 marks)
Trade blocs such as the European Union (EU) and the North American Free
Trade Agreement (NAFTA) over many advantages to member countries that
often involve the removal of regional trade barriers such as the elimination of
tariffs on most trade exchanged for members of NAFTA. This results in increased
trade among participating members and therefore boosts economic growth. One
example of this is the number of jobs in the UK that are linked to trade with other
members: 2.5 million. This shows that increased trade among the members of
the EU— for example the EU business trademark is recognized in 27 countries—
which results in large social and economic benefits.
However, trade blocs affect different groups of people in different ways. The
increased trade resulting from the formation of some trade blocs, such as NAFTA,
has led to an increased in outsourced labour. In the USA, the NAFTA has
increased the ease of TNCs relocating to Mexico, where labour costs are cheaper.
An impact of this is the displacement of 415,000 American jobs in the
manufacturing industry to Mexico, which is a major disadvantage for the public
whose employment opportunities have been greatly reduced.
Although socially there are many drawbacks, one positive result of outsourcing
for consumers is cheaper goods as costs are reduced for producers because of
cheaper imports and a wider market. This also leads to increased demand for
lower cost products, which then in turn benefits large companies such as TNCs as
well as the economy in general. The inclusion of Croatia in EU Trade Statistics
(joined EU in July 2013) shows that it has contributed to a £13.8 million increase
in exports and £6.5 million compared to the previous month. These figures
demonstrate some of the economic benefits of global groupings.
Furthermore, trade blocs can provide more political co-operation for example on
supra-national problems like global warming —members of the EU have targets
to cut greenhouse emissions and increase energy efficiency by 20% by 2020.
Within the EU, membership provides more political leverage on issues of
security and trade as well as providing protecting through the European Arrest
Warrant. Overall, the integration created by trade blocs has advantges and
disadvantages for different groups. Trade blocs provide a wider market for TNCs
to compete in which results in lower cost goods for consumers and economic
development for the participating member. However, global groupings result in
isolation in addition to the exclusion of other countries that are prevented from
being able to compete in the large markets, therefore limiting their economic
growth. Finally, the public can suffer from the creation of trade blocs through the
displacement and outsourcing of manufacture type jobs.
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