Topic > Direct Investment Case Study - 711

In a certain sense, the creation of regional trading blocs is interpreted as an obstacle to global trade and the exchange of international benefits. For example, the North American Free Trade Agreement (NAFTA), which includes the United States, Canada and Mexico, is a regional trade agreement between these countries, which involves fewer trade barriers and restrictions. The United States imports textiles and other goods from Mexico at a lower price than the local market, due to cheap labor and low tariffs. However, other Asian countries have a reputation for being a haven for low-cost manufacturing, such as China, which is even cheaper than Mexico. In this scenario, we note that regional blocs could limit the opportunities that international trade could offer. Likewise, the European Union is another example of regional blocs that bring together most European countries, such as France, Germany, Italy and others. European countries have special agreements where each country can trade with each other at lower tariffs and reduced restrictions. As a result, this may cause isolation from utilizing opportunities offered by other regions of the world such as production costs, cheap labor, technology transfer and production quality. Regional blocs reshape the world in terms of economic entities and geographic locations, which is contrary to the concept of global free trade adopted by the World