1. R.A Podar Institute of Management
Assignment 2
4/24/2015
Kritika Sharma
Roll No: 22
2. Q1. Write the critical evaluation of any of the Regional Economic Integration out of
the followings:
NAFTA
EU
SAARC
ASEAN
NAFTA
Negative Aspect:
NAFTA did just what a free-trade agreement is primarily aimed at accomplishing: increase
trade. Today, trade between Mexico, the U.S., and Canada has increased by 3.5 times the levels
seen in 1994.
In terms of trade liberalization, NAFTA is a success. Yet, NAFTA still faces
criticisms for perpetuating economic and social barriers and inequalities. Some of the identified
underlying economic and social goals of the signing parties to NAFTA are as follows: promote
equitable wages, job growth, align environmental standards, and increase investment.
NAFTA has led to net job growth or net job loss. On one hand, more jobs have been
created in Mexico and Canada in the manufacturing sector and more export related jobs have
been created in the U.S. On the other hand, manufacturing jobs in the U.S. have been outsourced
to countries, such as Mexico, where the wages are lower. In the manufacturing sector, it seems as
though NAFTA members must first accomplish the goals of equitable wages before job growth
is a possibility.
The NAACE aims to improve member nations’ understanding of the effects trade has on
the environment and to align member nations’ environmental policies. Although the NAACE
has set forth an environmental agenda for NAFTA members, measuring its success has been
difficult. The body has not yet determined what data would produce high-quality environmental
linkages to trade. The connections the NAACE has made show that trade liberalization depletes
specific natural resources and leads to increased air and water pollution. The main reason for
such impacts is that NAFTA member nations have failed to integrate trade and environmental
policies that combat such negative impacts.
Steps to be taken:
NAFTA has done exactly what free trade agreements are supposed to do: increase and liberalize
trade. In order to accomplish the underlying goals, governments need to make broader policy
changes.
First and foremost, member nations need to align their policies in the areas that effect trade,
for example, environmental and worker protection.
Third, members need to let go of protectionist measures and let comparative advantage do
its work. The U.S. continues to protect markets (namely agriculture) in which it does not have
the comparative advantage, disallowing counties (namely Mexico) from holding a larger stake in
those markets.
