Friday, 7 February 2020

The Effect of Free Trade Agreements on International Trade: An Empirical Analysis for Developed and Developing Countries




One of the more frequent campaign promises made by Donald Trump was the elimination of the North American Free Trade Agreement (NAFTA). Calling it “one of the worst deals ever”, he held it responsible for the unemployment of many U.S. citizens (Welker, 2017). The statement has been one of many regarding Trump’s plan to put “America first”. His plans on protection include the renegotiations or elimination of free trade agreements (FTAs), increasing import tariffs and the “Buy American-Hire American” statements. However, especially Trump’s stance on FTAs has been criticized by many economists, as it seems that there is no bigger gap between economists and politicians than on the subject of free trade (Lowenstein, 2017). 

Regarding the FTAs, Trump is going down a path which could have large consequences for the United States, but also to the related countries in the free trade agreements. On the 23rd of January 2017, the U.S. pulled out of the Trans-Pacific Partnership (TPP), which CNN dubbed as “the largest proposed free trade deal in history” (Riley, 2017). By the U.S. pulling out, the agreement cannot be ratified due to pre-arranged conditions on ratification. With the participating countries, consisting of developed and developing countries, having a combined Gross Domestic Product (GDP) of 27.4 trillion US dollars, this trade agreement could have huge consequences for the international trade of the participating countries. 


Read more: https://thesis.eur.nl/pub/38473/Huijskens-R.-388659.pdf

Suggested by: Noor Amalina Mohd Ismail (Statistician, DOSM)

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