The Trans-Pacific Partnership, also known as TPP constitutes of twelve nations lying on the Pacific Rim, which include the United States, Australia, Canada, Brunei, Japan, Chile, Mexico, Malaysia, Peru, New Zealand, Singapore and Vietnam . These countries account for over 40 percent of the economic output across the globe and 26 percent of the world trade. One of the major advantages of the TPP is removing tariff as well as non-tariff barriers to investment and trade and investment among the participant countries. Furthermore, the TPP streamlines the regulations, thereby implementing common standards and safeguards of intellectual property and foreign direct investment among other benefits . The TPP serves as an example for future trade treaties. Another significant advantage of the TPP is that it offers transparent and non-discriminatory trade access to the member countries, thereby opening up new markets for trade . The TPP boosts trade and enhance the living standards of individuals due to an increase in employment opportunities.
In terms of disadvantages, the TPP consists of countries with a huge difference in competitiveness and economic structure, which requires restructuring and reforming the economic strategies of these countries. Another important disadvantage is that the TPP costs jobs in various countries due to lesser labor requirements as firms exit from business. Member countries of Australia, New Zealand and Singapore have free market economies and would receive lesser benefits relative to their country’s GDP . High-wage countries encounter income inequality due to the TPP as it promotes cheaper goods imported from low-wage nations. Since the TPP protects copyrights and patents, high-paid owners of intellectual property receive maximum gains in terms of income when compared to low-paid owners. Another disadvantage of TPP is that it minimizes the availability of cheaper generics, thereby making drugs expensive.
The North American Free Trade Agreement or NAFTA is one of the most important trade agreements signed among the United States, Mexico and Canada. The agreement came into existence on 1st January, 1994 and aims at promoting the economic growth of the member countries . One of the major advantages of the NAFTA is that it enables import and export of goods with minimal penalties, thereby creating price wars and driving down the prices for consumers. The NAFTA plays a significant role in the creation of huge number of jobs across the member countries, thereby lowering the unemployment rates. Another crucial advantage of the NAFTA is that it increases wage rates at a significant rate and helps in alleviating poverty . The NAFTA is also crucial for boosting the economy of the three member countries and improving their global standards.
One of the major disadvantages of the NAFTA is that it stifles trade as major trade regulations are still in place, which lead to the slowdown of trade. Mexico has suffered a great loss due to the NAFTA as the US has streamlined the production of crops, which led to the loss of business of Mexican farmers . Due to lower wages in Mexico, most of the production companies shifted their base from the US and Canada to Mexico, which led to the loss of employment in these countries. Furthermore, the NAFTA adversely impacted the environment to a great extent. Most of the farms and factories had to compete with the factories and farms of the US and Canada, thereby leading to the use of chemicals and harmful fertilizers, which in turn affected the environment . There has been a suppression of wages within the US with a majority of the jobs moving to Mexico. One of the most important disadvantages of the NAFTA is that it led to the exploitation of the Maquiladora Workers. On the whole, the NAFTA impacted its member countries in both positive and negative ways.
References
Kong, H. L., & Wroth, L. K. (2015). NAFTA and Sustainable Development. Cambridge, MA: Cambridge University Press.
Schott, J. J., Kotschwar, B., & Muir, J. (2013). Understanding the Trans-Pacific Partnership. Washington: Peterson Institute for International Economics.
