NAFTA vs TPP: Difference and Comparison

We have 195 Countries in the world. Every country has its businesses and, the companies desire to spread their business through the world. NAFTA and TPP are the agreements between the countries that help in trading and business.

Key Takeaways

  1. NAFTA stands for North American Free Trade Agreement, an agreement between Canada, Mexico, and the United States to eliminate trade barriers between the three countries.
  2. TPP stands for Trans-Pacific Partnership, an agreement between 12 countries, including the United States, Canada, Mexico, Japan, Australia, and New Zealand, to reduce trade barriers and promote economic growth in the Asia-Pacific region.
  3. NAFTA focuses on trade between North American countries, while TPP focuses on trade between the Asia-Pacific and the Americas.

NAFTA vs TPP  

NAFTA (North American Free Trade Agreement) is a trade agreement between the US, Canada, and Mexico that aims to promote economic cooperation and reduce trade barriers. The TPP (Trans-Pacific Partnership) is a proposed trade agreement with 12 countries, but the US withdrew from it in 2017.

NAFTA vs TPP
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NAFTA derives the ‘North America Free Trade Agreement’ that eliminates the barriers between Mexico, Canada and the United States in marketing.

The Mexican president, the Canadian Prime Minister and the United States President signed the agreement in 1992, and it took effect in 1994 on January 1st. The trilateral trade bloc had started and continued between the three Countries.

TPP is an agreement between the 12 countries of the Pacific Rim. TPP stands for Trans-Pacific Partnership. The 12 countries involved in the TPP agreement are the United States, Malaysia, Mexico, Australia, Japan, New Zealand, Peru, Singapore, Brunei, Canada, Chile and Vietnam.

The TPP agreement had signed on February 4th, 2016. The TPP trade is the largest free trade deal on the earth and covers 40 per cent of the global economy.  

Comparison Table

Parameters of Comparison  NAFTA  TPP  
Meaning    
 
NAFTA is a trading agreement between three countries. TPP is a trading agreement between 12 Pacific Rim Countries 
Derivation      NAFTA stands for North America Free Trade Agreement. TPP had derived as Trans-Pacific Partnership. 
Establishment    
 
NAFTA had established in 1992 and effect on 1st January 1994. TPP had established on 4th February 2016.  
Countries Involved  The agreement had agreed upon between Mexico, Canada and the United States.   The TPP agreement had held between Australia, Canada, Chile, Japan, Brunei, Malaysia, Mexico, New Zealand, Vietnam, Peru, United States and United States Countries.  
Purpose NAFTA eliminates the tariffs, non-tariffs of exports and imports between three countries. TPP helps to trade between the 12 Pacific Countries. It supports providing middle-class jobs at good wages.   

What is NAFTA?  

NAFTA is an agreement which had signed by Mexico, Canada and the United States. The abbreviation of NAFTA is North America Free Trade Agreement. NAFTA is a marketing agreement between the three countries.

NAFTA eliminate the tariff and non-tariff barriers between the three countries and helps in business. The establishment of NAFTA took place in 1992 in North America, and its effect on January 1st, 1994.

The goal of NAFTA formation is to reduce trade costs and to increase business investments.

The legislatures in NAFTA had inspired by the European Economic Community’s success. It had established in 1953 to eliminate the tariffs among its members. NAFTA also involves agreements on international trading with business investors.

NAFTA helps reduce the cost of commerce. It encourages small businesses to invest and grow. Languages used in the NAFTA are English, Spanish and French.  

Most of the research says that NAFTA benefits the North American people and the average citizen and harms the small minority workers who work in industries.

NAFTA replaced the agreement of the Canada-United States, which had been established in 1988 between Canada and the United States. In 2017, the President of America’ Donald Trump, decided to replace NAFTA.

In September 2018, the United States, Mexico and Canada reached an agreement on NAFTA and replaced it with USMCA. USMCA stands for United States-Mexico-Canada-Agreement, and it had confirmed in March 2020.

NAFTA had worked until the USMCA had approved. NAFTA was good for GDP and possessed good diplomatic relations. The drawback of NAFTA is, it leads to the loss of manufacturing jobs in the United States.   

nafta

What is TPP?  

TPP is an agreement between the 12 Pacific Countries. The TPP had derived as Trans-Pacific Partnership.

The 12 countries, Australia, Canada, Chile, Japan, Peru, Singapore, United States, Vietnam, New Zealand, Mexico, Malaysia and Brunei, signed in the TPP agreement on 2016 February 4th. TPP is the centrepiece of Barak Obama’s strategy toward Asia.

But, the president of America, ‘Donald Trump’ withdrew from the United States in 2017. TPP agreement was the massive free deal trade in the World, and 40 per cent of the global economy had covered.

TPP used to support middle-class jobs with good wages and small investment businesses. The benefits of the formation of the Trans-Pacific Partnership are  

  • It had eliminated 18,000 plus income taxes that had been made in American exports.  
  • The workers used to get good wages at middle-class jobs.  
  • TPP was the first agreement that focused on central and small businesses.   

After the withdrawal of the United States, the legislatures of 11 countries agreed and replaced the TPP with CPTPP in December 2018. Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) allowed other countries to give membership.

The TPP announced the new regulations by allowing online commerce, foreign investors, comprehensive protection for intellectual property, labour codes and many others.

According to the United States Trade Representative (USTR), TPP is the first harmful trade for fish that contributed to overfishing. TPP had enforced anti-corruption laws and regulations.  

tpp

Main Differences Between NAFTA and TPP  

  1. NAFTA is an agreement between three countries about business and marketing, whereas TPP is an agreement between 12 Pacific Rims Countries.  
  2. NAFTA had signed in 1992 and took effect in 1994 on January 1st. In Contrast, TPP had signed on 4th February 2016.  
  3. NAFTA have the best diplomatic relation where TPP have eliminated 18,000 plus income taxes.  
  4.  NAFTA stands for North America Free Trade Agreement, and TPP stands for Trans-Pacific Partnership.  
  5. Both NAFTA and TPP are agreements for businesses, but NAFTA is between 3 countries. On the Other hand, the TPP agreement between 12 countries, which the U.S. had quit in 2017.  
Difference Between NAFTA and TPP
References
  1. https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/txamrpl5&section=15
  2. https://www.rieti.go.jp/en/events/16071201/pdf/16_pm2-1_leycegui.pdf
  3. https://books.google.com/books?hl=en&lr=&id=EDsuDwAAQBAJ&oi=fnd&pg=PA1&dq=+NAFTA+and+TPP+&ots=szoGNYoaKe&sig=vaXe2k66enRowbhHG6iKOcN3bWE

Last Updated : 14 July, 2023

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