This paper explores two interrelated topics in international trade. The first section examines the political and cultural pressures contributing to the slowdown of NAFTA, focusing on concerns about U.S. trade surpluses with Mexico and Canada and the argument that the agreement disproportionately benefits the United States. The second section analyzes Germany's trade balance, identifying its major trading partners — including the United States, Spain, France, and Italy — and discussing what Germany's preference for domestically produced goods means for companies seeking market entry into the German economy.
One of the major reasons behind the slowdown of NAFTA and the lack of expansion in transportation rights and in certain other aspects of the trade agreement is the political and cultural pressure being levied against the agreement by large groups of individuals in North America and around the world. Given the size and strength of the United States' economy — especially prior to the collapse of the nation's housing market and banking industries and the overall global economic recession that ensued — many felt, and continue to feel, that NAFTA and other similar trade agreements with the United States would lead to unfair advantages and gains for the United States while hurting its trading partners, or at least leaving them without any real benefits.
There is some merit to this argument, as the United States already maintains a massive trade surplus with Mexico and a still sizeable, though definitively smaller, surplus with Canada. With this current imbalance in trade in the region, many feel that NAFTA is highly exploitative of Mexico in particular, allowing goods from the United States to be exported to the country without generating any profit for Mexico via taxation, while Mexico simply does not have the industrial capacity to take advantage of the same situation in reverse.
Whether or not the slowdown of NAFTA will have a major hindering effect on the United States' economic growth remains to be seen. Canada remains one of the United States' largest trading partners despite the NAFTA slowdown, and trade with Europe and Asia — both of which provide large markets for U.S. goods and supply large quantities of imports — will not be affected by NAFTA in any direct way. It is likely, therefore, that the effects of this slowdown will be negligible.
Germany maintains an overall trade surplus of approximately one billion dollars, exporting more domestically produced goods than it imports. As the largest European economy with a still-vibrant industrial and manufacturing sector, this trade imbalance is hardly surprising — it is, in fact, more surprising that the surplus is not larger than it currently stands. When it comes to Germany's specific trading partners, there are also few surprises. The United States is a major importer of German goods, though it exports less to Germany than do other nations. Spain, France, and Italy also have significant trade relationships with Germany; all three are border-sharing neighbors, and all of them run trade deficits with Germany, importing more German goods than they export in return. Given the overall size of the German and other European economies, however, these trade imbalances are not especially extreme.
"Domestic preference shapes foreign market entry strategy"
Always verify citation format against your institution’s current style guide requirements.