NAFTA and USMCA: What's the Difference?

Question 1 

The EU was formed to promote peace and create a unified economic and monetary system that would encourage trade across borders and encourage technological advancements while championing environmental protection. The EU was founded on 1 st November 1993 by the Maastricht Treaty. The EU currently has 27 member countries, and 19 of them use the Euro as their currency (Fabbrini,2015). American companies face a challenge when it comes to the currency markets and hedging, especially after Brexit. Currency fluctuations of the British pound may impact the Euro, which can also affect the US dollar. U.K left the EU after a referendum, and this is known as Brexit. Companies wanting to do international business in Europe have to analyze the economic impact of Brexit. 

Question 2 

NAFTA and USMCA are both trade deals between the United States, Mexico and Canada. NAFTA was the first trade treaty between these countries repelled, and a new pact USMCA signed between these two countries. Labour laws are strengthened under USMCA, and it also includes digital trade, which was not in NAFTA. Environmental protection is enforced through regulations in the trade deal (Sanchez & Roldan,2020). The EU and USMCA are different, whereby the economic and monetary policies in the EU are made those affect member countries centrally. In contrast, USMCA member states have complete control over their economic and financial policies and individual currencies. 

Question 3 

The current exchange current is $1 equals 0.84 euros, while it was equal to 0.87 euros last year. The U.S seller would lose 37 euros for selling the item currently compared to selling it last year, and the French buyer would gain the same value by buying the item this year compared to the previous year (Beckmann, 2021). 

Question 4 

A "small donation" would be considered a bribe by the Department of Justice and Securities and Exchange Commission under the US Foreign Corrupt Practices Act of 1977. Therefore, one should avoid doing so as one can be prosecuted, which would lead to legal repercussions (Bixby,2010). The money should not be given and thus will not be recorded as a business expense or be taxed. 

Question 5 

Starbucks is one of the leading foods and beverage companies globally, founded in the USA but now has a global presence. Starbucks has opened thousands of stores outside the USA through franchising, licensing and partnering (Maguire & Hu,2013). They have ensured the standards have been maintained in outlets outside the USA. Their global business model has been a success, and they are also involved in projects with farmers who supply quality products. This allows Starbucks to obtain premium coffee which is their signature drink that pulls customers to their stores. 

Question 6 

Tariffs are a tax imposed on imported goods by a country mainly to discourage imports and promote their domestic interests. The rate of tariff varies depending on international trade relations between nations and the presence of trade deals. When the tariffs are very high, a company is likely not to perform in a new market because their products will be costly, and consumers will choose alternative products from their domestic market. Culture difference is an example of a non-tariff issue that may arise in international trade (Grundke & Moser,2019). If setting up a business in the UAE or any Muslim country, mainly in the Middle East, you find that their weekdays and weekends do not conform to those in the USA. Friday is their day to pray, and so it's a weekend while they work on Sunday, and in the USA, it's a weekend. Conforming to the culture may be a challenge. 

Question 7 

Data are goods only in billions of dollars (Olasehinde-Williams,2021). These are the three top countries that the USA trades with. 

Question 8 

Japanese greetings are done differently from the United States. The Japanese greet by bowing to each other while Americans greet each other by shaking their hands. It is essential when dealing with different cultures to be conversant with how they communicate and other matters pertaining to their culture (Yamada,2002). 

References 

Beckmann, J. (2021). Measurement and effects of euro/dollar exchange rate uncertainty. Journal of Economic Behavior & Organization . 

Bixby, M. B. (2010). The Lion Awakes: The Foreign Corrupt Practices Act-1977 to 2010. San Diego Int'l LJ , 12 , 89. 

Fabbrini, S. (2015). Which European Union? . Cambridge University Press. 

Grundke, R., & Moser, C. (2019). Hidden protectionism? Evidence from non-tariff barriers to trade in the United States. Journal of International Economics , 117 , 143-157. 

Olasehinde-Williams, G. (2021). Is US trade policy uncertainty powerful enough to predict global output volatility?. The Journal of International Trade & Economic Development , 30 (1), 138-154. 

Ramírez Sánchez, J. C., & Massa Roldán, R. (2020). Mexico’s Energy Regulatory Reform in the Context of a New Trilateral Agreement (NAFTA-USMCA). The International Trade Journal , 34 (1), 55-73. 

Smith Maguire, J., & Hu, D. (2013). Not a simple coffee shop: Local, global and glocal dimensions of the consumption of Starbucks in China. Social Identities , 19 (5), 670-684. 

Yamada, H. (2002). Different games, different rules: Why Americans and Japanese misunderstand each other . Why Americans and Japanese Mis.