The following paper refers to the potential of international free trade agreements to create interconnected economic markets, which require a common trade policy of the contracting countries.
The difficulty in this approach is to ensure an economic integration of both countries on the basis of bilateral treaties, despite differing cultural, social and economic attitudes. As an effect of the continuing globalization and the increased international interconnectedness, there is generally a rising number of international free trade agreements among countries with the intention to achieve economic growth and welfare that on the other hand simultaneously led to an increased amount of criticism arising from non-governmental organizations, consumer protection organizations or environmental groups. This oppositeness has received a lot of attention during the recent negotiations and implementation of the Comprehensive Economic and Trade Agreement (CETA) between the European Union and Canada.
Similar to the Transatlantic Trade and Investment Partnership (TTIP), which is a foreseen free trade agreement between the European Union and the United States that has been temporarily suspended due to huge protests, both agreements have in common that they bear more criticism that than any other free trade agreement ever before. This is why it is interesting to know to which degree there is a correlation of similarities and differences between a modern free trade agreement such as the CETA and an already established treaty like the North American Free Trade Agreement (NAFTA) between the United States, Mexico and Canada.
According to the title, there will be “An analysis of the benefits and critique between the free trade agreements NAFTA and CETA in a historical comparison” with the purpose of figuring out whether a certain contracting country is benefiting from the NAFTA or the CETA or if it is experiencing any social, environmental, cultural, economic or other disadvantages. In the following segments these aspects will be examined, contrasted and evaluated with the support of studies and current data to provide meaningful findings and to give a final recommendation for action at the end of the paper.
Table of Contents
3 Introduction
3.1 The course of work
4 Distinction of CETA and NAFTA
4.1 Emergence of the free trade agreements
4.2 Tariff-related aspects of CETA and NAFTA
4.3 Non-tariff-related aspects of CETA and NAFTA
5 Critical comparison between CETA and NAFTA
5.1 Non-transparent negotiations
5.2 Dissent regarding investment protection
5.3 Harmonization of standards
6 Economic effects of CETA and NAFTA
6.1 Employment
6.2 Trade volume
6.3 Economic growth
7 Conclusion and outlook
Objectives and Core Themes
The primary objective of this thesis is to provide a historical and critical comparative analysis of the benefits and criticisms associated with the North American Free Trade Agreement (NAFTA) and the Comprehensive Economic and Trade Agreement (CETA). The research seeks to determine whether contracting nations derive economic advantages or face social, environmental, cultural, or economic disadvantages, ultimately providing recommendations for future trade policy.
- Historical evolution and negotiation processes of NAFTA and CETA.
- Distinction between tariff-related and non-tariff trade barriers.
- Controversies regarding transparency, investment protection, and arbitration procedures.
- Analysis of the harmonization of social, environmental, and cultural standards.
- Quantitative assessment of economic impacts including employment, trade volume, and economic growth.
Excerpt from the Book
5.2 Dissent regarding investment protection
One of the most controversial parts of both free trade agreements is the procedure regarding the investment protection that should primarily guarantee foreign investors special property rights for its investments in the host country. Due to increased international interrelations and the continuing globalization process which was fostered by the end of the cold war, investors were allowed the possibility to invest in new markets. Furthermore, the investment protection with special property rights upon the investor´s capital investment is seen as beneficial for the host country as it stimulates economic growth (BMWi, 2018c). The application of investment protection clauses as a preventive measure should protect the investor from the risk of expropriation and should facilitate a comprehensive trade liberalization. The policy of the investment protection states that the investor possess the possibility to sue a contracting host country in which he made an investment, in case he sees an infringement upon his property rights. This issue mainly occurs when the company´s scope of decision-making is restricted by governmental laws of taxes or by environmental standards. In this case the investor has the right to take action to compensate for loss of profits against the host country before an investor-state dispute settlement, which mostly intends courts of arbitration as the primary decision-making body (BT, 2018, p. 5).
Summary of Chapters
3 Introduction: Outlines the research intent to compare NAFTA and CETA regarding their economic impact and societal criticism within a historical context.
4 Distinction of CETA and NAFTA: Details the emergence of both agreements and differentiates between their approaches to tariff and non-tariff trade barriers.
5 Critical comparison between CETA and NAFTA: Investigates the controversies surrounding secret negotiations, the investment dispute settlement mechanisms, and the harmonization of various regulatory standards.
6 Economic effects of CETA and NAFTA: Provides a quantitative analysis of how these agreements have influenced employment rates, trade volumes, and general economic growth for the involved nations.
7 Conclusion and outlook: Summarizes the key findings, suggesting that while NAFTA fostered economic dependency, CETA offers a more modern framework that still requires careful implementation and scrutiny.
Keywords
Free Trade Agreements, NAFTA, CETA, Economic Integration, Tariff Barriers, Non-Tariff Barriers, Investment Protection, ISDS, Arbitration, Harmonization of Standards, Employment, Trade Volume, Gross Domestic Product, Globalization, Sustainability.
Frequently Asked Questions
What is the primary focus of this thesis?
The paper provides a comparative analysis of the benefits and criticisms of the North American Free Trade Agreement (NAFTA) and the Comprehensive Economic and Trade Agreement (CETA) in a historical context.
What are the central thematic fields?
The research explores negotiation transparency, investment protection procedures, harmonization of international standards (environmental, social, cultural), and quantitative economic data.
What is the core research question?
The study aims to determine whether contracting countries benefit from these agreements or if they suffer from significant social, environmental, cultural, or economic disadvantages.
Which scientific methods are utilized?
The author uses a historical comparative approach, qualitative analysis of existing studies and data, and an evaluation of computer-based economic simulation models.
What is addressed in the main body?
The main part examines the differences in tariff and non-tariff trade policies, disputes over investment protection, and the socio-economic impacts on employment and GDP.
How can the work be characterized by its keywords?
Key terms include free trade agreements, ISDS, economic integration, standards harmonization, and GDP growth, reflecting the paper's focus on international trade law and economics.
How does the investment protection under NAFTA differ from CETA?
NAFTA historically relied on private, non-transparent arbitration panels, whereas CETA has moved towards a more institutionalized international court system with an appeal panel.
What conclusion is drawn regarding the "chilling effect"?
The author identifies a "chilling effect" where governments may be intimidated from passing environmental or social laws due to the threat of corporate lawsuits for lost profits.
- Quote paper
- Paul Petersen (Author), 2018, An analysis of the benefits and critique between the free trade agreements NAFTA and CETA in a historical comparison, Munich, GRIN Verlag, https://www.grin.com/document/429183
