The North American Free Trade Agreement (NAFTA)
The North American Free Trade Agreement (NAFTA) is a free trade agreement signed by Canada, the United States, and Mexico. This deal was reached by George H.W. Bush's administration on December 17, 1992, but it took effect on January 1, 1994.
The Benefits and Effects of NAFTA
NAFTA has benefited the United States by lowering import duties. However, as a result, the country has experienced certain localized losses. It is a provision of NAFTA that all three countries reduce their imports of manufactured products traded between them to zero. As a result, trade between these countries has increased significantly. Because of the three major global shifts which are taking place almost simultaneously, it is hard for Economists to pinpoint the exact effects of NAFTA. First, under NAFTA, the US enacted its tariff cuts on Mexican trade. Second, during the same period, China became a major exporting nation and technological advances greatly transformed how businesses operate.
Debate and Controversies Surrounding NAFTA
Despite the growing trade between the countries, NAFTA is being blamed for job losses in the U.S although it is not the leading cause. It is, however, important to note that NAFTA created new employment opportunities. Nevertheless, President Donald Trump does not support NAFTA, and nobody knows the reasons why. Countries that trade with each other always have a lot to fight about, but trade agreements always provide solutions to such disputes. Still, nobody knows what President Donald Trump finds irritating in NAFTA because trade skirmishes in the past do not seem to be informing his negotiation strategies. Trump has occasionally threatened Mexico with imposing a 35% import tariff on all of their goods.
The Evolution of NAFTA and Present Concerns
From the beginning, it looked like everyone disliked some aspects of NAFTA. This started with NAALC being the first organization to address labour standards. After NAALC, then came the environmental groups however they failed to provide a means for litigation. It was only during the Obama administration that some of the concerns such as labour and environmental provisions were addressed. Withdrawing from NAFTA or raising tariffs on imports from Mexico would have far-reaching consequences on the U.S exporters. Therefore, Trump should reconsider his NAFTA renegotiation initiative.
