U.S. Regional Trade Agreements
What Trade Agreements Do We Have With Our Neighbors?
Regional trade agreements are between countries in a specific region. The most powerful are those that encompass a few countries covering a wide and contiguous geographic area. These include the North Atlantic Free Trade Agreement and the European Union. That's usually because the countries involved share similar history, culture and economic goals. Regional trade agreements are hard to create and enforce when the countries are very diverse. An example of this is the Association of Southeast Asian Nations, whose countries share the Pacific Ocean as a common denominator.
Here is a summary of the most important regional trade agreements that the United States has either entered or negotiated. America also has a lot of bilateral trade agreements with specific countries. Also, the United States is a member of the World Trade Organization. It incorporates the most important multilateral trade agreement, the General Agreement on Tariffs and Trade.
NAFTA or North American Free Trade Agreement - NAFTA is the world's largest free trade area. It covers Canada, the United States, and Mexico. As of January 1, 2008, all tariffs between the three countries were eliminated. Between 1993 and 2009, trade tripled from $297 billion to $1.6 trillion. An in-depth look into the facts about NAFTA can reveal how the trade agreement has affected the three participating nations.
Trans-Pacific Partnership - The TPP would have replaced NAFTA as the world's largest agreement. In 2017, President Trump withdrew the United States from the agreement. It would have been between the United States and 11 other the countries bordering the Pacific. These are Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. Leaders of these countries signed the agreement in 2016. It was in process of being ratified by the members' legislatures.
Its goal is to enhance trade and investment. It promotes innovation, economic growth, and development. It supports job creation and retention. The TPP requires compatible regulations and support of small businesses. It's in keeping with the work of the Asia-Pacific Economic Cooperation Forum.
Trump’s decision to withdraw from the Trans-Pacific Partnership could pave the way for China’s membership. This could shift the balance of power in Asia.
Transatlantic Trade and Investment Partnership - The Transatlantic Trade and Investment Partnership would link two of the world's largest economies, the United States and the EU. Once ratified, it would replace NAFTA and the TPP as the world’s largest free trade area. It would apply to over one-third of the world's total economic output. The biggest obstacle is agri-business in both the United States and EU. Both trading partners heavily subsidize their food industries. The EU prohibits the use of genetically modified organisms and the addition of antibiotics and hormones in animals raised for food.
These practices are common in U.S. agribusiness. If these obstacles can be overcome, ratification of the TTIP will boost U.S. economic power.
FTAA or Free Trade Area of the Americas - Since the Reagan Administration, the United States has been trying to get a free trade agreement with all the countries of North, Central, and South America, as well as the Caribbean. At first, 34 countries agreed to negotiate an agreement that would expand NAFTA's success throughout the hemisphere. But by 2005, the effort had failed. Many South American countries, like Brazil, Venezuela, and Ecuador were afraid that eliminating tariffs would allow U.S.-subsidized agribusiness to put their local farmers out of work and force their people to work for U.S. corporations.
Other countries went on to enter into bilateral agreements with the United States, including Chile, Colombia, Panama, Peru, and Uruguay. Since the FTAA was abandoned in 2004, a much smaller trade agreement resulted between the United States and six other countries.
CAFTA-DR or Central American-Dominican Republic Free Trade Agreement - CAFTA was signed on August 5, 2004 by the United States and six countries. These nations were Costa Rica, Dominican Republic, Guatemala, Honduras, Nicaragua, and El Salvador. It eliminated tariffs on more than 80 percent of U.S. exports. By 2008, these exports grew to $26.3 billion. It for Central American sugar, textiles, and apparel imports. That reduced costs on these products for American consumers.
Total trade between the U.S. and CAFTA signatories was $60 billion in 2013.
ASEAN Initiative - ASEAN stands for the Association of Southeast Asian Nations. It includes 10 nations in Southeast Asia. It promotes the economic growth of its member countries to provide a balance of power to China and Japan. Members include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. U.S. trade with ASEAN countries grew to $182 billion in 2008. The ASEAN Initiative seeks to establish bilateral trade agreements with all ASEAN members of the WTO.
The United States has successfully negotiated agreements with them all, except Laos and Myanmar.
APEC or Asia-Pacific Economic Cooperation - includes countries in Asia and the Americas that border the Pacific Ocean. Its members are Australia, Brunei Darussalam, Canada, Chile, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, Philippines, Russia, Singapore, Taiwan, Thailand, and Vietnam. Its purpose is to increase negotiations between all member nations concerning common trade issues. The APEC economies comprise 44 percent of world trade and 54 percent of global gross domestic product.
In 2010, nine of the top markets for the United States were APEC members. They accounted for 60 percent of U.S. exports.
MEFTI - Middle Eastern Trade Initiative - MEFTI works with peaceful Middle Eastern countries to help them attain three goals. First, obtain membership in the World Trade Organization. Second, facilitate bilateral trade agreements. Third, help them enter into Trade and Investment Action Plans that encourages investment. The countries that are seeking membership in the WTO include Algeria, Lebanon, and Yemen. The United States has entered bilateral agreements with Israel, Jordan, Morocco, Bahrain, and Oman.