NAFTA (North American Free Trade Agreement)

North American Free Trade Agreement NAFTA stands for North American Free Trade Agreement. This agreement is a regulation implemented in January 1, 1994 in Mexico, Canada and the United States. This regulation is implemented to eliminate most tariffs on trade between these nations. The three countries phased out numerous tariffs on those related to agriculture, textiles and automobiles. NAFTA’s purpose is to encourage economic activity between the United States, Mexico and Canada.  About one-fourth of U.S. imports comes from Canada and Mexico. Canada and Mexico are the United States’ second- and third-largest suppliers of imported goods.  They especially imports crude oil, machinery, vehicles, fresh produce, livestock and processed foods.  In addition, about one-third of U.S. exports, particularly machinery, vehicle parts, mineral fuel and oil, and plastics are destined for Canada and Mexico.

Core activities of NAFTA:  Reduce barriers to trade  Increase cooperation for improving working conditions in North America  Create an expanded and safe market for goods and services produced in North America  Establish clear and mutually advantageous trade rules  Help to develop and expand world trade  Provide a catalyst to broader international cooperation

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Advantages of North American Free Trade Agreement  More free trade  Greater choices in goods and services  Lower prices of products  Improved quality products  Stronger health and safety standards  Improved economic stability in the U.S. marketplace  It creates marketplace that is increasingly driven more by supply and demand than by barriers to commerce

 Larger North American market access  Provide new export opportunities   Provide more investment opportunities  elimination of tariffs; Canadian and U.S. tariffs were eliminated on January 1, 1998; Mexico became duty free by the year 2008 for North American made products

 Creation of strong "rules of origin" for North American made products  Effective procedures to resolve trade disputes  Establishment of compatible standards of goods between the three countries  Facilitation of cross-border movement of goods and services

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Disadvantages of North American Free Trade Agreement  Excessive Pollution 

There have been several reports of excessive pollution produced by U. S. owned companies in countries.

 Increased Mobility of People across Borders 

NAFTA greatly influenced the mobility of people across U. S. and Canadian borders. Many politicians fault NAFTA with the ever increasing stream of illegal immigrants from Mexico and South America. Canada has also seen a huge increase in immigrants from Mexico and from the United States as a result of NAFTA.

 Less Competition 

Many small businesses argue that NAFTA has made their operations less competitive due to the low wages. The construction and hospitality sectors have been adversely affected due to NAFTA.

 Lower Wage Workers 

Larger national and international businesses still hire undocumented immigrants for low wages.

 Decreased Economic Viability  No Financial Compensation 

A large number of Canadian, Mexican, and U.S. companies have filed for bankruptcy. To date no government has awarded any company any settlement for a loss that resulted from NAFTA.

 Environmental Concerns 

The Democrats that supported NAFTA now do not opt to support the agreement completely based on environmental concerns

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