U.S. Regional Trade Agreements
What Trade Agreements Do We Have With Our Neighbors?
Definition: Regional trade agreements are between countries in a specific region. The most powerful are when they encompass a few countries that cover a wide and contiguous geographic area. These include NAFTA 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 ASEAN, 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 1993-2009, trade tripled from $297 billion to $1.6 trillion. For more on the advantages, disadvantages, history and purpose of NAFTA, read The Facts About NAFTA.
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 – 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 APEC. For more, see Trans-Pacific Partnership.
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. Furthermore, the EU prohibits the use of GMOS and the addition of antibiotics and hormones in animals raised for food. These practices are common in U.S. agribusiness. For more, see TTIP.
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. However, 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, forcing their people to work for U.S. corporations. Other countries went on to enter into bilateral agreements with the U.S., including Chile, Colombia, Panama, Peru and Uruguay. For details, see FTAA.
CAFTA-DR or Central American-Dominican Republic Free Trade Agreement - CAFTA was signed on August 5, 2004, by the United States and six countries: Costa Rica, Dominican Republic, Guatemala, Honduras, Nicaragua and El Salvador. It eliminated tariffs on more than 80% of U.S. exports.
By 2008, these exports grew to $26.3 billion. It opened U.S. trade restrictions 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. (Source: "CAFTA-DR Dominican Republic-Central America FTA," USTR.)
ASEAN Initiative - ASEAN stands for the Association for South East Asia Nations. It includes ten 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 - APEC 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. (Source: "APEC," USTR.)
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.