Question

Deb’s Auto Alarms has sold car alarms in the United States for 15 years. Owner Deborah Lefkowitz has read about the opportunities that globalization presents for businesses, and she is thinking about seeking entry to several international markets. She asks you for advice: "I’ve heard about free trade agreements among different groups of countries: World Trade Organization (WTO), the North American Free Trade Agreement (NAFTA), the European Union (EU), the Association of Southeast Asian Nations (ASEAN), Mercosur in Latin America, the African Free Trade Zone (AFTZ) . . . In general, it seems as though these agreements have had positive effects on economic growth, but they have also been controversial in some ways. What can you tell me about them?"

Based on your knowledge of international trade organizations, answer the following question.
Which of the following statements correctly describes the North American Free Trade Agreement (NAFTA)? Check all that apply.

a) A drawback of NAFTA is that it has erected barriers to the entry of small businesses into the international market.
b) Business people in the United States, Canada, and Mexico have mixed opinions about whether NAFTA has been a success.
c) NAFTA reduced the amount of trade among the countries involved.
d) NAFTA dramatically reduced tariffs on goods traded among the United States, Canada, and Mexico.

Answer 1

The following are the two statements that are true about NAFTA:

1) Business people in the United States, Canada, and Mexico have mixed opinions about whether NAFTA has been a success -

• The countries that haven't been benefited by the implementation of NAFTA tend to believe that NAFTA cannot be considered as a substantial success. On the other hand, the ones who have had the chance to fetch profit out of the trading done wit the other two countries call it a success.

2) NAFTA dramatically reduced tariffs on goods traded among the United States, Canada, and Mexico:

• The implementation of NAFTA was itself for the sole purpose of reducing the tariffs that were earlier applicable on the cross-boundary trade that took place between the three countries.