Question

What are the positive economic arguments for regional integration (European Union, USMCA - previously NAFTA)? Given these arguments, why did Trump decide to reform NAFTA as USMCA, and the British) electorate decide to leave the E.U. (Brexit)?

Answer 1

The first positive economic argument for regional argument is that it facilitates free trade among the member nations and each country can trade in other member countries' market. Hence, output for each member nation increases. The second positive economic argument is the free or regulated movement of labor so that firms get a competitive labor market and economy is fueled due to the good supply of workers in the market. Cost of production decreases as well. The third positive argument is the common economic policies that bring strategic alliances among the member nations. The nations make policies that complement each other.

While with all the given benefits, Trump decided to reform NAFTA, because Trump wanted to renegotiate the terms of the trade as prescribed in the NAFTA. Trump observed that the existing terms are not favorable to the USA in the given scenario, so he went for the reforms and created USMCA. It will make a more balanced trade terms to the USA after the USMCA is created.

British people also mandated to move out of EU and termed it as BREXIT, because EU made UK unable to frame their own economic policies, form their own trade alliances with other nations out of EU and UK market got flooded with the labor of other weak EU member countries. It made a negative impact upon the economy of UK and they decided that they were better off if they move out of EU. So, they took the decision of BREXIT.