Why are the rules of origin needed for a free-trade area? How might they be protectionist? Which countries are likely to gain, and which are likely to lose, from the North American Free Trade Area? How are the gains and losses likely to be distributed across occupations and sections of the Mexican economy? What about the U

Rules of origin are used in determining the national source of a given good. This way, they can be able to determine whether the goods should be duty-free or they qualify to get a cut on the duty fee to be paid as it is influenced by the sources of import.

Protectionism can be described as rules and regulations set by the government to control the flow of international trade. The main aim is to help develop the industries in a given country. The rule of origin acts as a protectionist as it helps regulate the number of imported items in a country. Through rules of origin, a country can establish the goods to be taxed and those that are duty-free, hence helping in promoting local industries and save them from foreign competition.

NAFTA (North American Free Trade Area) is a consensus between the US, Canada, and Mexico. The US gets to gain more from the agreement whereas, in terms of GDP, Canada benefits more. On the contrary side of it, Mexico gets to lose from the agreement since their farmers were put out of business by the US subsidizing its farm products.

The gains in the Mexican economy can be in terms of foreign investment whereby US companies get to base their operations in Mexico hence contributing towards their GDP, however, Mexico has also faced losses whereby due to the agreement, there is an increase in the rate of unemployment because most farmers are left out of business by the fact that the US subsidizes its agricultural products, hence contributing to the downfall of the Mexican economy. The US economy has been able to experience gains from the agreement due to the fact that exports from the US to Canada and Mexico have increased by over 155% during the agreement period while the export rate from the US to other foreign countries only grew by 65%. This means that the signing of the agreement has helped grow the economy of the US.