Nafta Trade Agreement and The Trade Conflict between Brazil and European Nations (Essay Sample)

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International Trade
Q1 NAFTA is North America Free Trade Agreement and it refers to the contract or agreement that was signed by North American countries and specifically between United State, Mexico, and Cannada. The rationale behind NAFTA can, therefore, be divided into Canada rationale, United State Rationale and Mexico Rational.
Starting by Canada rationale, we know that there was a relative trade between Canada and Mexico. It was, therefore, logical for Canada to decline to join NAFTA negotiations given that there had been a rancorous debate between Canada and United State. However, Canada was in the dilemma since she would have been disadvantaged should Mexico and United State had signed the deal in her absence. Should agreement would have been reached between U.S. and Mexico without Canada then only U.S. would have benefited since it was going to be the only country to access the markets in Canada and Mexico and trade arrangement that was called hub and spoke. The first risk that Canada was going to face was diversion of trade which could involve displacing goods from Canada from various markets since U.S. goods would penetrate through Mexican markets without any duty being charged on them while Canadian goods would have attracted hefty duties making them be uncompetitive in the market since they would be forced to charge higher prices that the U.S. goods. The second risk was that they were the possibility of Canada facing the shift in investment since many multinational firms would have preferred to invest in U.S. which was called the hub.