Case Study There are four major types of trade or economic blocs: freetrade area, customs union, common market. and economic union. WTO rules generally call for equal trade barriers against all other countries (at least those that are also members of the WTOJthe mostfavorednation principle. But the WTO rules also have a few exceptions, including an exception for a trade bloc that achieves substantially free trade among its members. A trade bloc can have several effects on the wellbeing of its member countries and the world overall. We usually analyze trade blocs by comparing them to countries maintaining barriers against all other countries. The net effect depends on whether the gains from trade creation are larger than the losses from trade diversion. For the European Union, most estimates are that the EU gains from its internal free trade in ma nufactures. because trade creation has been larger than trade diversion. and because there are probably also dynamic gains, although these are harder to measure. Additional gains came as the move toward a true common market in 1992 removed nontariff barriers and freed resource movements. However, the EU also incurs substantial losses from its highly protectionist common agricultural policy. In 2004. 10 additional countries joined the EU, in 2007 two more, and in 2013 one more (Croatia), bringing the total number of members to 28. Integration of the new members has been relatively smooth, though some features of EU policies have been phased in slowly for them. The North American Free Trade Area {NAFTA} began in 1994, subsuming the previous CanadaU5. Free Trade Area. NAFTA has eliminated tariffs, reduced some nontariff barriers, and liberalized trade in services and crossborder business investments. The formation of NAFTA was controversial. In Mexico there were fears of jobs lost to more productive US. and Canadian rms, as well as the loss of political sovereignty as NAFTA committed Mexico to change a number of its government policies. In the United States there were fears of job losses to lowwage Mexico, as well as complaints about linking with a country that has a corrupt political system and poor environmental protection. Proponents in both Mexico and the United States hoped that NAFTA would commit the Mexican government to maintain and extend its marketoriented reforms. Discuss these thoughts provided above in light of one of the two famous trade blocs mentioned above (EU and NAFTA]. Your discussion has to be ONLY one page. Font size is 12, Times new Roman. Single line spacing. You must write in your own words. Submit in SafeAssign. Due date is [December 6th, 2020)
