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In the present day, regional trading agreements may be defined as a treaty signed by several countries in order to encourage trade and the movement of products and services across its members borders. In general, international tariffs, quotas, and other trade barriers limit the transportation of goods and services across states. In this case, regional trading agreements are introduced as they come with specific internal rules followed by members. That is why a considerable number of countries currently aim to sign regional trading agreements to ensure their continued economic growth. Thus, in 2020, the United States-Mexico-Canada Agreement (USMCA), which substituted the North America Free Trade Agreement (NAFTA), entered into force (Office of the United States Trade Representative, n.d.). This paper aims to evaluate USMCA in order to support the statement that this agreement benefits the economies of all member countries.
First of all, it is necessary to mention that the creation of USMCA for mutual economic benefits was presupposed by several factors. Being the parts of North America, the United States, Canada, and Mexico are the main trade partners of each other (The White House, n.d.). Moreover, they have already built an integrated platform for manufacturing in multiple industries, including machinery, automobiles, medical devices, electronics, equipment, household appliances, and agriculture. At the same time, economic challenges that were caused by the COVID-19 pandemic demonstrated the necessity for integration and close cooperation to avoid more substantial economic decline.
Besides, USMCA is highly beneficial for small and medium-sized businesses as it establishes investment and trade opportunities for them. Thus, the agreement facilitates cross-border transactions and transportation. For instance, USMCAs Customs and Trade Facilitation Chapter helps businesses ease international trade by reducing transportation costs, the online publication of documents required for a trade, customs clearance, and procedures of error correction (Office of the United States Trade Representative, n.d.). Moreover, in USMCA, the regulations of online trade were introduced for the first time, prohibiting customs duties on the distribution of digital products and protecting cross-border data flow.
In addition, USMCA guarantees access to members inner markets, especially agricultural ones, stimulating export and international trade. For instance, it provides the U.S. with greater access to Canadas dairy, poultry, and egg markets (The White House, n.d., para. 4). In turn, Canada and Mexico increase access to each others markets as well. Moreover, the agreement stimulates regional manufacturing thus, according to it, at least 75% of vehicle parts should be produced in North America with zero tariffs and increased wages for workers (The White House, n.d.). Therefore, USMCA leads to the creation of new job positions and the enforcement of labor rights. In particular, new rules focus on the regulation of payment in order to provide appropriate working conditions for citizens.
To conclude, the notion related to the benefits of regional trading agreements for countries economic growth is supported by the example of USMCA, the agreement between North American states. It was signed for the prosperity of the regional economy through balanced and fair trade, support for small and medium-sized businesses, and cooperative manufacturing. Moreover, USMCA is beneficial for countries citizens, especially for those ones who operate in the automobile industry and agriculture, as it stimulates employment and contributes to the creation of high-paying jobs. Finally, the agreement emphasizes the importance of working rights enforcing industries commitments to prioritize them.
References
Office of the United States Trade Representative. (n.d.). United States-Mexico-Canada Agreement fact sheet. Supporting Americas small and medium-sized businesses. Web.
The White House (n.d.). 2019 WH statement on USMCA benefits [PDF document]. Web.
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