First it was Mexico. Then Canada. Now, the United States looks forward to negotiating a free trade agreement with the European Union.
Mexico’s free trade agreement with the EU took effect in 2000 for goods and in 2001, services. Canada is still trying to finalize its trade negotiations with the EU since the first round took place in October 2009. (Next week: Guest Post by a former Canadian trade representative on the Canada-EU trade talks) The United States anticipates starting negotiations with the EU by June 2013.
The success of a trade deal between the EU and all three North American countries will enhance Trans-Atlantic trade. Formal trade across the Atlantic will add to the Trans-Pacific trade bloc, which is currently being negotiated and includes Mexico, Canada and the United States.
We will only know the effects of the different agreements across both the Atlantic and Pacific once talks are actually finalized and the deals implemented. Nonetheless, it reminds me of economist Jagdish Bhagwati’s warning of the spaghetti bowl effect, in which there are a number of overlapping trade agreements. In other words, it will be interesting to see what the Trans-Pacific Partnership Agreement (Mexico, Canada, United States, and nine other countries) will mean for current trade pacts such as the North American Free Trade Agreement (Mexico, Canada, United States). Furthermore, it is worth seeing how the different North American countries’ access to the EU market will be impacted by separate trade deals with the EU, provided that Canada and the United States finalize an agreement with the EU.
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