NAFTA, DRUGS, RULING - Essay Example

Solutions to Mexico’s drug crises Difference between Custom Unions and Common Market: Customs union are, the union abolishes all tariffs among member countries, and those member countries agree to a single, external tariff on the goods that are imported from another source outside the custom union. The revenue generated by the custom union is usually shared amongst the members based, on a certain formula. A good example is the South African customs Unions. In common market, a common tariff is placed on imports from other non-member countries.

The main difference between the custom union and common market is that, the free-movement of labor and the capital is allowed. On the other hand, restrictions on immigrations and cross border investments (amongst member countries) are abolished. The two best examples that we can look at are, the common market for Eastern and South Africa. The other one is the Caribbean Community and Common Market (Luhnnow). 2) Economy of the United States: Because the risk associated with drug, trafficking has a very high reward for example the single wholesale price for a single kilo of cocaine is about $15,000 to $25,000 in the United States and it can go up to $80,000 in New York.

Because of this very reason, the underground economy has seen a growth. 3) (i) The creation of NAFTA has ultimately eliminated barriers to trade and it helps to carry out cross-border movements of goods and services, secondly the creation of NAFTA has increased investment opportunities, it promoted fair competition, it provided protection and enforced property rights of people. (ii) Experts suggest that legalization of drugs mainly marijuana could hurt the Mexican cartels. These Mexican cartels make more than half of their revenue by marijuana.

One of the Mexican and the U.S officials says that legalization could possibly be the only way; this could shift marijuana production to places like California, where the drug production can be made more efficiently and a lot closer to consumers. Mexico’s objective is to make the U.S self-sufficient in marijuana. Three former Latin American presidents are in the view that legalizing marijuana can be an effective tool against murderous and drug gangs. Legalization could also help to understand better of how the cartels work as a business. (iii) The IRS is the United States government agency made to gather yearly state and income tax from working citizens and businesses.

Therefore, the citizens pay income tax to the IRS yearly. By increasing surveillance of 30 million businesses, there will be a strict check and balance and the United States Government will be able to generate more revenue from taxation. Moreover, a value added tax (VAT) is a form of consumption tax. The consumer pays VAT on the purchase price to buy a particular product; therefore, it is the value added tax on the product. When a consumer buys a product the United States Government extracts the tax from the consumers, which helps the Government accumulate revenue (Geek).

Works Cited Geek. "What is the IRS (Internal Revenue Service)?" 2012. http://www.wisegeek.com. 20 April 2012 . Luhnnow, David. "Saving Mexico." 26 December 2009. http://online.wsj.com. 20 April 2012 .