Chapter 18.3, Problem 2R

To determine

To discuss: The effect of trade agreements on US exports.

Explanation of Solution

The effect of trade agreements on US exports:

Trade Agreements	Effect on US exports
NAFTA	It reduces and eliminates the trade barriers between Canada, Mexico and US. Therefore, the exports increased due to NAFTA.
CAFTA	It reduces and eliminates the trade barriers between Central America and Dominican republic for around 80% of US exports. Therefore, the exports increased due to CAFTA.
EU	It encourages the trade and eliminates the trade barriers among its European country members. It will be a rival in US in terms of market size. Therefore, the exports are expected to decrease due to EU.

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