Answer:
The North American Free Commerce Agreement allowed for the growth of trade between Mexico and the United States (NAFTA).
What is free trade agreement? How does it benefit exporters?
If two nations have a free trade agreement, there are no restrictions on commerce between them. This indicates that there are no trade restrictions, such as tariffs or quotas, between the trading partners. Depending on what they produce, exporters may experience a variety of repercussions from this.
Exporters who use the best factor of production in a nation typically benefit from free trade. Land, labor, capital, and human capital are the production elements.
Let's take the case where US and Bangladesh have free commerce. Bangladeshi exporters of goods made with inexpensive labor would profit from this transaction. Bangladesh has a significant labor supply surplus, giving it a competitive edge over businesses of a comparable nature in the US. Because there are no trade barriers, they can create their items, like clothing, for less money, sell them for less money, and outcompete American companies.
The best production variables in America, however, are capital and human capital. In this situation, US exporters of capital goods like machinery and cutting-edge equipment might outperform Bangladeshi manufacturers.
Therefore, in this scenario, free trade would benefit US manufacturers of capital- and human-capital-related items at the expense of US producers of products using cheap labor. While Bangladeshi manufacturers of goods requiring cheap labor would gain, those who make goods tied to capital and human capital would suffer.
Thank you,
Eddie