NAFTA vs EU
EU stands for European Union. It is a large regional system comprising of all European nations who applied and received membership of this union. It is the largest free trade block in the world today, and the main aim behind the creation of European union was to remove trade barriers between countries sharing not just borders but cultures, histories, languages, and people. NAFTA stands for North American Free Trade Agreement, and it is, in fact, an attempt by America to have a free trade zone comparable to EU. Though there are many similarities between NAFTA and EU, there are glaring differences also that will be highlighted in this article.
EU
Despite the countries of Europe fighting wars between themselves for the last thousand years, the fact remains that is a continent comprising 27 countries sharing a lot among themselves. The shared history, language, and culture have forced them to aspire for making a large bloc of countries having no trade barriers and having a supranational identity. European Union is like a club joined by member countries, which come together to follow the rules for the common welfare of the nations and their people. It is actually a political and economic partnership of the 27 member countries that aims for prosperity and development of the entire region. It was the Maastricht Treaty of 1993 that brought EU into a reality. EU has been conceived as a single market area with a single currency Euro being used in all 27 member countries. With a combined population of nearly 500 million and a GDP of 20% of the total GDP of the world, EU has today become a strong political entity.
NAFTA
NAFTA is a creation of the US following the success and coming into reality of a dream called European Union. Spelled North American Free Trade Agreement, NAFTA is a large free trade area covering US, Canada, and Mexico, the three countries falling in this geographical region. It came into existence in 1994, and since then it has been strengthened by the addition of several more treaties between members of NAFTA in the areas of economic cooperation, labor, and now security. Before NAFTA, there were a large number of duties and barriers in trade between the member countries. American goods attracted these duties, and people in Mexico and Canada had to pay a higher amount to purchase these goods. Canada and Mexico have benefitted in a very big way since the implementation of NAFTA. The agreement has encouraged not only higher trade, but also higher level of immigration between the three countries.
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What is the difference between NAFTA and EU? • People in EU have a single currency called Euro while the three member countries make use of their own currencies in NAFTA • NAFTA is just an agreement meant to foster trade between member countries while EU is a distinct political entity with European Parliament in place • The three members of NAFTA were not enemies while EU contains many members who have fought several wars with each other • EU has emerged as a trading block for the rest of the world and a confederation that commands 20% GDP of the world
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You have heard of the Mexican-American War, no?
Not all EU members use the euro. Three – Britain, Denmark, and Sweden – never will. Seven have yet to qualify
Thank you for clearing that. I was too quite baffled as I read that line with a raised eyebrow. Seeing as I’m from Sweden, I don’t remember the last time I payed using a euro bill.
The US and Canada have also fought a war — the War of 1812.
The Spanish American War
How has NAFTA affected the economies of North America and the EU affected Europe? What importance do these economic pacts have for international managers in North American, Europe and Asia?