EECS 1520 Lecture Notes - Lecture 18: North American Free Trade Agreement, Single European Act
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EECS 1520 Lecture 18 Notes
Introduction
Single European Act
In the late 1980s, industrialized countries in Europe agreed to make regulations more
uniform and to remove many taxes on goods traded among themselves.
This agreement, which was formalized by the Single European Act of 1987, was followed
by a series of negotiations among the countries to achieve uniform policies by 1992.
The act allows firms in a given European country greater access to supplies from firms in
other European countries.
Many firms, including European subsidiaries of U.S.-based MNCs, have capitalized on
this agreement by attempting to penetrate markets in border countries.
By producing more of the same product and distributing it across European countries,
firms are now better able to achieve economies of scale.
Best Foods (now part of Unilever) was one of many MNCs that increased efficiency by
streamlining manufacturing operations in response to reduced trade barriers.
NAFTA
As a result of the North American Free Trade Agreement (NAFTA) of 1993, trade barriers
between the United States and Mexico were eliminated.
Some U.S. firms attempted to capitalize on this by exporting goods that had previously
been restricted by barriers to Mexico.
Other firms established subsidiaries in Mexico to produce their goods at a lower cost
than was possible in the United States before selling them in the United States.
The removal of trade barriers essentially allowed U.S. firms to penetrate product and
labor markets that were previously inaccessible.
The removal of trade barriers between the United States and Mexico allows Mexican
firms to export some products to the United States that were previously restricted.
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Document Summary
In the late 1980s, industrialized countries in europe agreed to make regulations more uniform and to remove many taxes on goods traded among themselves. As a result of the north american free trade agreement (nafta) of 1993, trade barriers between the united states and mexico were eliminated. The removal of trade barriers essentially allowed u. s. firms to penetrate product and labor markets that were previously inaccessible. The removal of trade barriers between the united states and mexico allows mexican firms to export some products to the united states that were previously restricted. Thus, u. s. firms that produce these goods are now subject to competition from mexican exporters. Industrialized countries in europe agreed to make regulations more uniform and to remove many taxes on goods traded among them. This agreement, which was formalized by the single european act of 1987, was followed by a series of negotiations among the countries to achieve uniform policies by 1992.