Discussion on Identify the extent to which such agreement yield the benefits to the member states that they were originally intended

 It is important to understand that such trade agreements will always have some pros and cons at the same time, but it is vital to see if the pros are able to outweigh cons. NAFTA has been an important trade agreement between the U.S, Canada, and Mexico, which was started in 1994. The original intention was to encourage and stimulate trade between the three member states. As far as its importance is concerned, it is one of the largest and biggest trade blocks in the world, which is covering 444mn people. So, the original intention was to increase trade between the three nations, and this is what they experienced. According to facts & figures released for the period of 1993-2007, it was revealed that earlier the trade volume between three nations was $293bn, which reached to a level of $909bn in 2007. It shows that NAFTA was yielding great benefits for the member states in so many ways. The growth and development of trade have been stimulated by NAFTA for all member states, and they have been able to found new opportunities.

            NAFTA allowed the U.S, Canada, and Mexico to get benefits in different business sectors. For instance, if the manufacturing sector is taken, there were niches for each country, and they were able to tap those niches to manufacture more goods to produce more profits. A product’s manufacturing process was divided between the three countries, like raw materials coming from one country, then its initial technology process done in the second country and then sent to a cheap-labor country for the final assembly of the product. So, it opened doors to new opportunities for the manufacturing of all three nations. Jobs were another major benefit obtained by all three countries. A great employment marketplace was opened with the help of NAFTA, which allowed creating more jobs and acquiring diverse talent. Knowledge sharing was another major benefit in this regard like Mexico was able to learn from countries like the U.S and Canada. The other primary benefit was attained for the consumers of all three member states, as less costly goods were produced, which allowed the consumers to get cheaper products. The agriculture sector also took advantages of NAFTA like the United States’ agriculture exports were exponentially increased to Mexico and Canada (MacKechnie, 2020)

Q 2: Analyze the advantages of (NAFTA) as regional trade agreement.

            NAFTA has come up with so many advantages for all three member countries, ever since it was started, and these advantages have been very progressive in so many ways. It is not just a statement; rather it is something, which has been proved by the research as well. For instance, a report was released in 2017 by Congressional Research Service that due to the NAFTA act between the U.S, Mexico, and Canada, the trade has tripled for all three nations, which is not a small thing. Moreover, tariffs have been either eliminated or at least reduced due to this trade agreement. Out of six primary benefits, it was the first major benefit for member states. The second major advantage of NAFTA is great and increased trade, as well as, economic output. It was found by the U.S International Trade Commission that when NAFTA is implanted with its full force, it will have great benefits for the U.S as they would experience a great increase in the growth. It is a fact when economic activity is experiencing growth and development, and when the trade is stimulated with a rapid increase in trade activities, and then its direct positive effect is observed in terms of creating jobs. NAFTA has been able to do this as this increased trade activity created more jobs, especially for Mexico. Overall, 17.7mn jobs were supported by this single trade agreement, which shows the level of impact it has come up with all three member countries.

            Still, it has more potential to create more jobs for all three countries, if terms are managed carefully. It is a fact that Foreign Direct Investment (FDI) is another important indicator showing positive signs for an economy. The fourth primary advantage of NAFTA is an increase in FDI, which has actually tripled in numbers. It was observed that the FDI of the United States in 1993 was $15.2bn for Mexico, which was able to reach in 2012 at the amount of $104.4bn. The same is the case with Canada, where FDI by the U.S was $69.9bn in 1993, which reached a level of $352.9bn till the year 2015. FDI made by Canada and Mexico for the United States was also increased in a huge percentage. So, more FDI meant more economic activity, creating more jobs and opportunities. The fifth major advantage of NAFTA was in terms of government spending. The suppliers of all three countries were able to get access to contracts made under NAFTA, which allowed them to be more flexible in increasing their business activities. It also helped to increase the level of competition, which is always a good thing for the market. The last major advantage of NAFTA for all three countries was low prices for the consumers. The tariffs were eliminated in most cases, or they were reduced to a level, where costs decreased significantly. For instance, due to fewer tariffs, the United States was able to import oil as per its requirement from Mexico, which was a great benefit for them. Improving oil form the Middle East was more costly, but NAFTA allowed the United States to enjoy this advantage. There were a few disadvantages, which were also observed for NAFTA, but its advantages are way more important than its disadvantages (AMADEO, 2020)

Scenario 2

Q 3: Measure the importance of regional trade agreement among GCC countries.

            Before measuring the importance of regional trade agreement between the GCC countries, it is vital to see in general, why trade agreements are critical for countries, and why they should always be considered. It is vital to understand that free trade agreements are signed between countries, where certain kinds of rules and obligations are agreed in terms of trading goods & services. The other major part of trade agreements is to provide benefits to the suppliers, manufacturers, as well as, investors so that more people are encouraged to do business by investing money into different business sectors. More business activity means more economic activity, which leads to creating more jobs and growth opportunities for all the parties involved in the process. One good example of showing the advantage of a free trade agreement is the capacity to eliminate or at least reduce trade tariffs and barriers, which allow suppliers to lower their costs, and this thing ultimately benefits the consumers, as the cost of products is also lowered. The trade agreements are also vital for countries to boost their economies in so many ways, and when the economy is doing well, it has long-lasting positive effects on all sections of society. That’s why it is always imperative for countries in a region to develop new regional trade agreements to capture all of such benefits (NOAH , 2018)

            It is imperative for GCC member states to understand the importance of free trade agreements, as so many trade agreements have been made on a global level, and those trade agreements produced great results for those regions. More trade agreements are also considered or signed on regional levels, but GCC has been lacking in this regard. They are far behind in this race from various other regions. The recent dip in the oil prices showing that regional trade agreement between GCC countries is becoming more and more critical in so many ways. One good example for GCC is the European Union, one of the largest trading partners’ agreements in the world. The Association of Southeast Asian Nations (ASEAN) is another major example and GCC countries can learn a lot from them. If ASEAN countries are taken as a single entity, then they constitute for 7th largest economy all around the globe. These examples of regional trade agreements are evident to prove that trade agreements are crucial for a region to grow together and face regional, as well as, global challenges. The GCC countries should understand that a well-planned trade agreement has so many potential benefits and opportunities for all member countries. They can find more business and investment opportunities, and at the time, when oil prices are going down, they can look for other options to boost their economies to stay on the right track (Trenwith, 2015)

Q 4: Explain the UAE type of economy, and how UAE facing competition.

            If the UAE’s economy is explained in simple terms, then it is vital to know that the UAE is having a mixed free market-based economy. The actual dependency of this economy is based on the oil and gas sector. The production of oil and gas is the major portion of their gross domestic product (GDP). It is true that the economy of the UAE has been dependent on oil primarily, but they also started to realize in recent times that they need to diversify their economy to deal with any challenges and competition, which is rising on the regional and global levels. So, it was indispensable to diversify their economy and add more value to its economy by capturing other business and economic sectors. They have taken a great interest and focused on other sectors such as manufacturing, commerce, real estate, hotels, transportation, construction, as well as, finance sectors. They are becoming a major global force by adopting these initiatives, and if they continue to become more diversified in economic terms, the UAE will be a major economic force in the future (Medleva, 2019)

            It is mentioned earlier that the UAE was able to realize that they have to develop more diversification in their economy so that they can become more competitive on a global scale, and this is what they have been able to achieve. The World Economic Forum has issued the Global Competitiveness Report 2019, which has revealed that UAE is at top of the list in Arab countries in this regard, whereas their number on a global level is 25th, which is improved by the previous years. It is showing the level of competitiveness asserted by the UAE in the time when global competition is so intense. They have done it by focusing on all competitiveness indicators, which are vital, and this focus has allowed them to compete well than all the other Arab countries. They have faced this competition by updating the level of legislation, streamlining their basic procedures, as well as, adopting modernization in all economic and business sectors. The UAE government is doing a great job to facilitate business sectors so that more business activities are created to boost the economy (Augustine, 2019)

References Identify the extent to which such agreement yield the benefits to the member states that they were originally intended

AMADEO, K. (2020). NAFTA Pros and Cons. Retrieved May 15, 2020, from https://www.thebalance.com/nafta-pros-and-cons-3970481

Augustine, B. D. (2019). UAE leads Arab region in Global Competitiveness. Retrieved May 15, 2020, from https://gulfnews.com/business/uae-leads-arab-region-in-global-competitiveness-1.67012879

MacKechnie, C. (2020). North American Free Trade Agreement Benefits. Retrieved May 15, 2020, from https://smallbusiness.chron.com/north-american-trade-agreement-benefits-3836.html

Medleva, V. (2019). Economy of the UAE: from a sandy desert into a global phenomenon. Retrieved May 15, 2020, from https://capital.com/economy-of-the-uae

NOAH , D. (2018). Why Free Trade Agreements Are Important. Retrieved May 15, 2020, from https://www.shippingsolutions.com/blog/why-free-trade-agreements-are-important

Trenwith, C. (2015). The case for free trade in the GCC. Retrieved May 15, 2020, from https://www.arabianbusiness.com/the-case-for-free-trade-in-gcc-604126.html