North America Free Trade Agreement (NAFTA -- Pros and Cons)

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to pay a tax on their exports. This allows domestic producers to increase their domestic supply, which causes an increase in the domestic price, leading to a more prosperous country. The next form of a trade barrier is a quota. This restricts the amount of imports. The effects of a quota are similar to that of a tariff. However, unlike a tariff, this form of barrier restricts imports instead of taxing them. The third main trade barrier is a subsidy. Subsidies provide funds to certain domestic markets. More notable the agricultural sector is commonly known for these kinds of trade blocs. This will increase supply due to the producer’s ability to generate more crops without as much foreign competition. Consequently, this causes an increase in market price and a decrease in quantity demanded, which is the total amount of goods or services that are required at a particular time. As a result, domestic producers benefit and consumers lose welfare.

Therefore, the main objective of ...

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have been quite evident. According to economist and author Gary Hufbauer, “It has worked. North American firms are now more efficient and productive. They have restructured to take advantage of economies of scale in production and intra-industry specialization." (Huffbauer 2) However, it’s difficult to measure NAFTA’s effect very precisely, given the complexities involved in “pin-pointing” the exact culprit to economic shift, additionally, it’s nearly impossible to foresee an economy without NAFTA. Therefore, in efforts to asses the true effects of NAFTA it requires a complex analysis of measuring trade between nations, and the externalities that arise from the exchange process.

It’s ...

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