International Trade

Questions: 1. NAFTA, the North American Free Trade Agreement, reduces trade barriers between the US, Canada and Mexico. Both President Trump and Senator Bernie Sanders campaigned during 2016 against international trade agreements, including NAFTA. Suppose that President Trump takes the US out of NAFTA altogether (a) Will that be more likely to push GNI (Gross National Income) for NAFTA members up or down, and why? (b) Mention two other important consequences for the US and Mexico in particular that would follow from the end of NAFTA. (Note: you are not being asked to assess whether NAFTA has been a success or not, and while trade agreements are considered in detail in Module 5 you do not need to read that yet as the answers to these questions depend on points from the material and prescribed readings in Module 4.) 2. The focus of US trade with China is usually on the large amount we import from there, but China happens to be the third largest export market for the US. In 2016 the US exported $21 billion in some agricultural products to China while importing only $4.3 billion in others. Looking at the kinds of agricultural products this web site (ustr.gov/countries-regions/china-mongolia-taiwan/peoples-republic-china ) says the US exports and imports to or from China, explain how each country can come to have a comparative advantage in the agricultural products it exports? (Don't consider the products one by one. Take US ag exports as a group and Chinese ag exports as another group.)