Question

Define NAFTA, the European Union, and MERCOSUR.

What are trade sanctions and embargos.

List and describe an example of a global company that faces ethical issues for its operations outside the US.

Answer 1

Answering Question 1 only

NAFTA is an acronym for the North American Free Trade Agreement which came into effect on 1^st January, 1994, to lift all taxes on exports and imports on virtually all goods being traded among the 3 countries the US, Canada and Mexico.

The primary objective of this agreement was to make it easier and promote business for companies across borders in these 3 countries. This would boost economic integration and increase economic prosperity in all the 3 nations concerned.

The European Union is a group of 28 countries in Europe that operate as a cohesive economic and political block. To increase the cohesiveness, 19 of the countries use the Euro as their official currency. The EU developed more out of a desire to form a single political entity primarily to end the centuries of warfare among the European nations, with World War II being a prime culmination which decimated much of the continent. It started off as a single European market, established in 1993 by 12 countries to ensure free movement of goods, services, people and money.

The European Community which began in 1957 under the Treaty of Rome, was formalized into an act which brought about the idea of a single European market with the Maastricht Treaty, which took effect on 1^st November, 1993. This treaty also created the Euro, intended to be the single currency for the EU. Euro came in on 1^st January, 1999, however Denmark and UK opted out of the same. The ensuing crisis between the EU and European Central Bank (ECB) has seen high sovereign debt and a full blown crisis among member states of Portugal, Italy, Greece and Spain.

Mercosur is an economic and political bloc comprising of Argentina, Brazil, Uruguay, Paraguay and Venezuela. Created with the objective to promote free trade within the group, Mercosur had high ambitions of integrating the region. It was created in 1991 through the Treaty of Asuncion, an accord calling for the free movement of goods, services and factors of production between the member nations. Initially it had 4 countries with Venezuela joining the group only in 2012 as a full member, only to be suspended in late 2016.

The four countries agreed to eliminate custom duties, and have a common external tariff (CET) of 35% on certain imports from outside the bloc, and also have a common trade policy with other countries and blocs. It hoped for a common market similar to that of the EU and also pondered having a common currency. The bloc also acted in a large part as a means to cement the rapprochement between Argentina and Brazil, whose relations were very strained as both looked to gain regional dominance and had conflicting economic and political agendas.