Market makes member nations better potential customers for their exports. On the other hand, the

firms’ exports of these countries encounter tariffs which make it difficult to compete in EEC markets.

For example, before the establishment of the Common Market, American, German, and

French automobile manufacturers all faced the same tariff in selling their products to, say, Belgium.

However, with the establishment of internal free trade among EEC members, Belgian tariffs

On German Volkswagens and French Renaults fell to zero, but an external tariff still applies to

American Chevrolets and Fords. This clearly puts American firms and those of other nonmember

Nations at a serious competitive disadvantage. The situation is the same with any other goods. The

Elimination of this disadvantage has been one of the United States and other countries motivations

For promoting freer trade through the WTO.

C) US—Canadian Free-Trade Agreement

A second example of economic integration is the US-Canadian Free-Trade Agreement signed

By President Reagan and Prime Minister Mulroney in 1988. Although three-fourths of the trade

Between the United States and Canada was already duty-free in 1988, the US—Canadian accord is

highly significant: It created the largest free-trade area in the world.

Under terms of the agreement, all trade restrictions such as tariffs, quotas, and nontariff barriers