Trade agreements are either bilateral or multilateral pact that enables different nations to trade with each other without tariffs or other obstacles freely (Peng, 2016). Trade agreements between many countries result in the formation of a trading bloc such as the European Union, which can be classified as the most successful. The basis for the support of trade agreements is the balance between supply and demand (Salzl, & Johnson, 2017). For example, if a country is agriculturally advance, with surplus food to sell, and the other one is heavily mechanized; both countries have a demand deficit, and extra items to sell externally. A free trade agreement between the two enables one to export agricultural products to the other while importing the agricultural machines free of any quotas and tariffs (Peng, 2016). No country can agree to enter a trade agreement with the other if there will be no mutual benefits. Besides trade, the deals can have other benefits such as travel, residence, and freedom.
The United States of America is in a free trade agreement with many nations; among them, Mexico. The country does well agriculturally; hence we depend on it for corn, dairy, soybean meals, and poultry (Salzl, & Johnson, 2017). Many people depend on fast foods such as poultry, corn and wheat products from Mexico for lunch and snacks during the day. Personally, I must eat a piece of meat at least once a day; hence the trade agreement greatly benefits me because it ensures that the products are affordable. In response, Mexico greatly benefits from automotive imports.
There are a few disadvantages to this free trade. Mexico is greatly overburdened with narcotic drugs. Every trafficker’s dream is to smuggle the products into the US market alongside the food products (Villareal, & Fergusson, 2017). The drugs are hidden in agricultural products. Besides that, many illegal immigrants from different parts of the world use this as a safer entry route into the US. This has an effect on security and gang infiltration in the US, which is an adverse effect of the trade agreement (Salzl, & Johnson, 2017). However, a close review reveals that the benefits of the trade agreement outdoes the risks and disadvantages encountered hence the deal should remain.
- Peng, M. W. (2016). Global business. Cengage Learning.
- Salzl, H., & Johnson, K. (2017). Insights from Professors. Marriott Student Review, 1(1), 10.
- Villareal, M., & Fergusson, I. F. (2017). The North American Free Trade Agreement (NAFTA).