Question

has the united states signed or lost from nafta? limit your analysis within the context of monopolistic competition and adjustment cost?

Answer 1

1. President Donald Trump threatened the bilateral trade agreement with Mexico and might reconsider the trilateral trade agreement of Mexico and Canada signing the replacement for NAFTA known as the USMCA (United States- Mexico-Canada Agreement) according to the studies so far from December 2018.

2. Studies show that the net economic effects of NAFTA on the United States as well as Mexico remained small but positive to some sectors of both the countries even they have undergone adjustment costs.

3. USMCA is proposed to connect the cultural and economics aspects of the mentioned countries in the agreement and United States wanted prospering Mexico in its special interest as its neighbouring country.

4.Mexico acts as third largest trading partner of U.S where U.S occupies monopolistic position to that of Mexico where for Mexico, U.S is the largest trading partner.

5. Canada acts as an export market for the goods and services of the United States.

Both the countries have their own cultural and economic impacts on the United States in a positive manner due to which U.S want the formation of USMCA, which according to the President had to be negotiated.