TRANS-ATLANTIC FREE TRADE AGREEMENT
Since Adam Smith wrote about “Free Markets” in his magnum opus “The Wealth of Nations”, economists, capitalists, as well as market socialists are aiming for country-systems where trade happens without governmental, or any other interference, no tariffs or any other barriers. The goal of free trade areas is to eliminate exactly these hurdles for free trade. Free trade areas are trade blocs consisting of states who signed a Free Trade Agreement (FTA) which eliminates things as tariffs, import quotas and preferences on, in the best case, all goods and services between them. The goal of such FTA’s basically is to reduce barriers to exchange so that trade can grow. The reason why trade can grow is because of specialization, division of labour and the most important thing, comparative advantage. The next step of a FTA would be a customs union, which has a common external tariff. Members of FTA’s are free to set their own external tariff.
The TAFTA, the Trans-Atlantic Free Trade Agreement, is herefore a proposal for a FTA between the US and Europe, as shown in Picture 1. Other possible members of this FTA could be the European Free Trade Agreement (EFTA) and the North-American Free Trade Agreement (NAFTA).
Such proposals like this have been made almost 20 years ago, but in February 2013 the president of the United States, Barack Obama, came up with this topic again in his State-of-the-Union speech. Since then, negotiations for the so-called Trans-Atlantic Trade and Investment Partnership (TTIP) are ongoing. (LabourNet, 2013)
This report aims to find out the advantages or disadvantages for the United States such an agreement or partnership would bring with it.
Picture : Member States of the TAFTA
2 Importance of the FTA
2.1 Importance for the United States
Free Trade Agreements (FTA) have proved to be one of the best ways to open up foreign markets to U.S. exporters. Trade Agreements reduce barriers to United States (U.S.) exports, and