What Are the Advantages of the European Union and the NAB?
A trading nation is basically a nation in which foreign trade constitutes a major portion of its gross domestic product. As such, a nation with a strong trading reputation is viewed as a stable economy with low inflation and stable public finances. Conversely, a nation that has little trading commerce is viewed as unstable by international investors and with high inflation and a high degree of government corruption.
One of the most pressing issues in international trade is the imbalance that currently exists between the developed world and the developing nations. Many believe that the lack of free trade is what is causing this imbalance, but this is not true. Globalization has been occurring for decades and it is only now, with the creation of the World Trade Organization, that there is a real effort to reduce the size of the gaps between the developed world and the developing nations. However, even if the free trade provisions within the World Trade Organization were adopted across the board, it would not be enough to reverse the trends that are currently being experienced in the international trade.
The United States is currently the largest single trading nation and is doing so with a great deal of success. However, other countries, primarily in the European Union and Japan, are aggressively pursuing bilateral free trade deals. As a result, the U.S. is currently losing out on much of the action. The European Union is aggressively pursuing bilateral trade deals with all of the other nations of the world, while Japan is attempting to pull a fast one with India. These moves by the EU and Japanese are being viewed with considerable skepticism by the United States and the rest of the world.
If these nations join the international free trade association, the gap in competitiveness will be reduced to an extreme level. It will no longer be seen as unfeasible for the United States to pursue its lead in manufacturing. Moreover, the European Union and Japanese can easily join because they have comparable levels of economic integration. The only major hindrance to these kinds of deals is political will. Without the political will to join the European Union and the Japanese Trade Agreement, it is unlikely that these deals will move forward.
Perhaps the most significant advantage to be derived from the European Union and the JPNTA is the effect it will have on the global free trade agenda. Many economic textbooks and reports have estimated the value of the trans-Atlantic trade to the United States. If you were to remove the free trade aspect, you would immediately realize that the EU/JPNTA is equal to or slightly more than the United States/ NAFTA. In fact, the United States does not even come close to being a credible alternative to the EU when it comes to exporting products and services. The other thing that must be noted is that the EU has been working very hard to strengthen its ties with the United States. This means that the United States will be able to use its economic might to support its interests around the world.
Free trade areas around the world provide opportunities for Canadian companies to increase their revenues while at the same time providing a lot of jobs for the people of Canada. A strong global economy will allow the commodities exporters to make more money and provide more jobs to Canadians while also making goods more available to other producers and importers of commodities and products. The development of the EU/NAB can potentially change the face of global trade in a major way. As more countries join, the advantages of the EU/NAB become even more pronounced.