NAFTA vs EU: Difference and Comparison

NAFTA and EU are both treaties. Both aim to create a zone free from trade restrictions that would shrink the economy’s growth.

NAFTA and EU both have their difference when it comes to size, scope, implementations and goals while making a decision.

Key Takeaways

  1. NAFTA (North American Free Trade Agreement) is a trade agreement between Canada, Mexico, and the United States to promote free trade and investment among the three countries.
  2. EU (European Union) is a political and economic union of 27 member states in Europe, established to promote economic integration, political cooperation, and regional stability.
  3. NAFTA focuses on reducing trade barriers and increasing investment opportunities between member countries. At the same time, the EU has a broader mandate that includes common trade, agriculture, and regional development policies.

NAFTA vs EU

The difference between NAFTA and the EU is that NAFTA has its goal set to eliminate the barrier to trade and investment between Canada, the US and Mexico. On the other hand, the primary purpose of the EU is to create a monopoly of the European market by creating rules and implementing duties that would apply to all people of those states, ensuring freedom of movement in goods and capital.

NAFTA vs EU
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The full form of NAFTA is the North American free trade agreement. This is a two-sided trade agreement between Canada, the United States and Mexico. This was first implemented in the year 1994 on the first of January. When Trump was the president, NAFTA was negotiated again since Trump argued the fact that the US didn’t get many benefits as compared to Mexico and Canada by this agreement.

The full form of the EU is the European Union. The creation of the EU began right after World War 2 ended. This was implemented in the year 1958. Initially, when it was formed, only six members were a part of this treaty. They were the Netherlands, Belgium, Luxembourg, Italy, France and Germany. Later on, there was an increase in the number of countries as the years passed, forming an alliance of about 28 countries today.

Comparison Table

Parameters of ComparisonNAFTAEU
Full formThe complete form of NAFTA is a North American free trade agreement.The complete form of the EU is the European Union.
Number of MembersNAFTA contains 3 countries in its treaty.The EU contains 27 countries in total.
CurrencyIn NAFTA, all three countries have three different currencies which people use.In the EU, one common currency for all the 28 members of the state, is the Euro.
AimNAFTA aims at an economic relationship.EU aims to create freedom in political socials and trade restrictions between the members.
TariffNAFTA does not have a standard external tariff.The EU does have a standard external tariff.

What is NAFTA?

The full form of NAFTA is the North American free trade agreement. This is a two-sided trade agreement between Canada, the United States and Mexico.

This was first implemented in the year 1994 on the first of January. When Trump was the president, NAFTA was negotiated again since Trump argued on the fact that the US didn’t get many benefits as compared to Mexico and Canada by this agreement.

The NAFTA contained provisions such as the availability of flexible trade relationships among the three countries, which could be done only by eliminating the economic barriers, promoting and protecting property rights intellectually and government procurement by rules of origin between the three countries.

Even though NAFTA contains in its treaty the provisions which relate to the relationship of economics and procedures in a customized way, it does not cover any policy regarding areas. It doesn’t aim to set a political or territorial agreement between these three countries.

NAFTA is purely an agreement made for economic purposes only between the US, Mexico and Canada.

nafta

What is EU?

The complete form of the EU is the European Union. The creation of the EU began right after World War 2 ended.

This was implemented in the year 1958. Initially, when it was formed, only six members were a part of this treaty.

They were the Netherlands, Belgium, Luxembourg, Italy, France and Germany. Later on, there was an increase in the number of countries as the years passed, forming an alliance of about 28 countries today.

This treaty was finally created in the year 1993.

This treaty has aimed at promoting world peace in the entire world by helping improve the standard of living among people in most parts of Europe.

This resulted in forming a single currency named the Euro, which further Persuaded a trade-free movement among the European countries.

Through this, people could move and travel freely within European Boundaries without visas.

The main provisions set by the EU were to enhance the economic, political and social cohesion among the states by promoting social well-being.

This promoted a sense of security and freedom among the states, which encouraged people to have a competitive market demand due to the generation of a common currency, the Euro.

This treated all members of all the European states without any discrimination and any exclusion that was earlier made socially.

eu

Main Differences Between NAFTA and EU

  1. The full form of NAFTA is a North American free-trade agreement; on the other hand, the full state of the EU is the European Union.
  2. NAFTA has 3 members in its treaty, while the EU contains 28 countries.
  3. In NAFTA, all three countries have three different currencies which people use, and on the other hand, in the EU, there is one common currency for all the 28 members of the state, which is the Euro.
  4. NAFTA aims at an economic relationship only, whereas the EU aims to create freedom in political socials and trade restrictions between the members.
  5. NAFTA does not have a standard external tariff as such, while on the other hand, the EU does have a common external tariff.
Difference Between NAFTA and EU
References
  1. https://books.google.com/books?hl=en&lr=&id=CGsAVNftkecC&oi=fnd&pg=PR9&dq=nafta+vs+eu&ots=M63FCO2Bd3&sig=0AX2zct03m3xfeIoyT0ebWAWmbs
  2. https://www.jstor.org/stable/2954211

Last Updated : 11 June, 2023

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