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U.S. Regional Trade Agreements



Juliana Cruz Cruz, (front row left to right) Gracia Cruz Martinez and Ester Cruz Cruz dig and break apart clay that they use to make pottery and sell in the market on February 22, 2008 in Tlacolula. Each woman has a husband, brother or son working in the United States leaving the women behind to care for the family. Immigration is empowering women to step out of their traditional domestic roles, to work outside of the home and become leaders in the community.

Photo: Dana Romanoff/Getty Images

Every country wants to protect its farmers from foreign competition.

Credit: KAZUHIRO NOGI/AFP/Getty Images

The TPP countries all border the Pacific Ocean.

What Are Regional Trade Agreements?

Regional trade agreements are between countries in a particular region. The most powerful are when they encompass a few countries that cover a wide and contiguous geographic area. These include NAFTA and the European Union. That's usually because the countries involved share similar history, culture and economic goals. Regional trade agreements become more difficult to create and enforce when the countries involved are more diverse. An example of this is ASEAN, whose countries share the Pacific Ocean as a common denominator.

Here is a summary of the most important regional trade agreements that the U.S. has entered, or at least tried to negotiate. The U.S. also has a lot of bilateral trade agreements with specific countries. In addition, the U.S. is a member of the World Trade Organization, which hosts the most important multilateral trade agreement, the GATT.

NAFTA or North American Free Trade Agreement

NAFTA is the world's largest free trade area. It covers Canada, the U.S. and Mexico. As of January 1, 2008, all tariffs between the three countries were eliminated. Between 1993-2009, trade tripled from $297 billion to $1.6 trillion. For more on the advantages, disadvantages, history and purpose of NAFTA, read The Facts About NAFTA.

Trans-Pacific Partnership

In 2010, the U.S. entered into negotiations with eight other countries bordering the Pacific – Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore, and Vietnam. Since then, Canada, Japan and Mexico has entered the agreement. The goal is to enhance trade and investment among the TPP partner countries, promote innovation, economic growth and development, and support the creation and retention of jobs. The TPP includes new trade requirements addressing compatibility of regulations and support of small businesses. This agreement is in keeping with the work of APEC. For more, see Trans-Pacific Partnership.

Transatlantic Trade and Investment Partnership

The Transatlantic Trade and Investment Partnership, or TTIP, would link the world's two largest economies,  the U.S. and the European Union. As a result, it would become the world’s largest free trade area, controlling more than third of the world's total economic output. However, the biggest obstacle is agri-business in both the U.S. and EU. Both trading partners heavily subsidize their food industries. Furthermore, the EU prohibits the use of GMOS and the addition of antibiotics and hormones in animals raised for food. For more, see TTIP.

FTAA or Free Trade Area of the Americas

Since the Reagan Administration, the U.S. has been trying to get a free trade agreement with all the countries in Central and South America. In other words, the U.S. would like to expand NAFTA's success throughout the hemisphere. Many South American countries are afraid that eliminating tariffs would allow U.S.-subsidized agribusiness to put their local farmers out of work, forcing their people to work for U.S. corporations. Many countries have agreed to enter into bilateral agreements with the U.S. as a result of the FTAA, including Chile, Colombia, Panama, Peru and Uruguay.

CAFTA-DR or Central American-Dominican Republic Free Trade Agreement

CAFTA was signed on August 5, 2004 by the U.S. and six countries: Costa Rica, Dominican Republic, Guatemala, Honduras, Nicaragua and El Salvador. It eliminated tariffs on more than 80% of U.S. exports. By 2008, these exports grew to $26.3 billion. It opened U.S. trade restrictions for Central American sugar, textiles and apparel imports. This reduced costs on these products for American consumers. Total trade between the U.S. and CAFTA signatories was $37.9 billion in 2009 (most recent data available). Thanks to the recession, this was lower than the trade figure of in $45.6 billion in 2008. (Source: USTR, CAFTA-DR Dominican Republic-Central America FTA)

ASEAN Initiative

ASEAN stand for the Association for South East Asia Nations, which includes 10 nations in Southeast Asia whose purpose is to promote economic growth of the member countries, providing a balance of power to China and Japan. Members include: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. U.S. trade with ASEAN countries grew to $182 billion in 2008. The ASEAN Initiative seeks to establish bilateral trade agreement with all ASEAN member countries that already in the WTO. The U.S. has successfully negotiated agreements with them all, except Laos and Myanmar.

APEC or Asia-Pacific Economic Cooperation

APEC includes those countries in Asia and the Americas that border the Pacific Ocean: Australia, Brunei Darussalam, Canada, Chile, China, Hong Kong, Indonesia, Japan, Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, Philippines, Russia, Singapore, Taiwan, Thailand, and Vietnam. Its purpose is to increase negotiations between all member nations concerning common trade issues. The APEC economies comprise 44% of world trade and 54% of global GDP. In 2010, nine of the top markets for the U.S. were APEC members, accounting for 60% of U.S. exports. IN 2014, China will host the APEC meeting in Beijing. (Source: USTR, APEC)

MEFTI - Middle Eastern Trade Initiative

In addition to a series of bilateral agreements, MEFTI works with peaceful Middle Eastern countries to help them obtain membership in the World Trade Organization (WTO),and to enter into Trade and Investment Action Plans (TIFA) that encourages investment. The countries that are seeking membership in the WTO include Algeria, Lebanon and Yemen. The U.S. has entered bilateral agreements with Israel, Jordan, Morocco, Bahrain, and Oman. Article updated December 21, 2012

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