The North American Free Trade Agreement Nick Abel
Introduction Agreements are important for any version of trade between two or more parties If those involved cannot come to an agreement, it can cause many problems Many times two or more people or countries would like to trade with each other but cannot agree on the terms, so the deal falls through. This is bad for everyone.
What is the North American Free Trade Agreement? Known as NAFTA Definition from naftanow.org : comprehensive agreement that sets the rules for international trade and investment between Canada, the United States, and Mexico. Very important for all trade between the North American Countries
History of NAFTA In 1984, the Trade and Tariff Act was passed. (not part of NAFTA but helped us be able to have it passed) Canadian Prime-Minister and Reagan agreed on a Canada-United States Free Trade Agreement, which is what sparked trade agreements between North America. President H.W. Bush began negotiations with Mexican President Salinas for a liberalized trade agreement for the two countries. Shortly after, Canada wished for an agreement between themselves, Mexico, and the United States, which ultimately led to NAFTA In 1993, the agreement was approved and signed by the North American Countries.
Goals and Objectives more free trade which would result in a larger variety of goods available in each country, lower prices, improve the quality of the good produced, better health and safety standards for the producers, improved economic stability in the U.S. marketplace, and a market that is driven more by supply and demand. tariff elimination for qualifying products Elimination of nontariff barriers by the year 2008 tariff reduction for motor vehicles and auto parts expanded telecommunications trade reduced textile and clothing barriers Many more
Benefits from NAFTA Quadrupled trade between Mexico, Canada and the United States, which boosted profits, and jobs for all three countries. It also lowered prices for consumers. trade between the three members quadrupled, from $297 billion to $1.14 trillion. (according to Kimberly Amadeo of thebalance.com) Lowered the prices on exported goods such as food. Improves economic growth economy of the U.S. grew by around 0.5 percent and the United States farm exports to Mexico and Canada grew 156 percent. (according to Kimberly Amadeo)
Concerns/problems with NAFTA Because of NAFTA, Wages in Mexico are as low as U.S. 57 cents per hour for unskilled labor and an average of U.S. $3.80 per hour for skilled labor (according to http://people.virginia.edu/~wjk/nafta.html) This could cause jobs to shift over to Mexico from the United States because it is so much cheaper. Potential loss of industry Occurs when firms are unable to compete with foreign competitors because of the lower cost structures of those competitors, so they either close the firm or relocate it to a foreign country. Seemed to not deliver the results that were wanted regarding the economy of Mexico Between 1993 and 2013, Mexico's economy grew at an average rate of just 1.3 percent a year which was much lower than what NAFTA was supposed to do. it put around two million Mexican farmers out of work. While NAFTA wasn t the only cause of this, it seemed to be the primary cause.
What the Future Holds for NAFTA President Trump is attempting to get rid of NAFTA all together "The fact is that NAFTA has been a disaster for the United States and a complete and total disaster. We're going to make some very big changes or we're going to get rid of NAFTA once and for all. (from one of his speeches) If it was to be revoked, tariffs for trade with Mexico would be a whopping 35 percent. This would have a very negative impact on firms in America that manufacture products in Mexico, such as Coca-Cola. Some say that NAFTA is necessary for trade within North America, and some say it is something that must be put to an end. It all depends on the person s point of view.
Works Cited N.A. North American Free Trade Agreement." The Agreement NAFTANow.org. N.p., 01 Apr. 2008. Web. 18 Apr. 2017. <http://www.naftanow.org/agreement/default_en.asp>. Amadeo, Kimberly. "What Is the History and Purpose of NAFTA?" The Balance. N.p., 9 Mar. 2017. Web. 18 Apr. 2017. <https://www.thebalance.com/history-of-nafta-3306272>. North American Free Trade Agreement (NAFTA... - inc.com." Inc.com. N.p., n.d. Web. 18 Apr. 2017. <https://www.inc.com/encyclopedia/north-american-free-trade-agreement-nafta.html>. Kehoe, William J. "NAFTA: CONCEPT, PROBLEMS, PROMISE." NAFTA: CONCEPT, PROBLEMS, PROMISE. N.p., n.d. Web. 18 Apr. 2017. <http://people.virginia.edu/~wjk/nafta.html>. Mcbride, James, and Mohammed Aly Sergie. "NAFTA's Economic Impact." Council on Foreign Relations. N.p., n.d. Web. 18 Apr. 2017. <http://www.cfr.org/trade/naftas-economic-impact/p15790>.