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North American Free Trade Agreement (Nafta)

2079 words - 9 pages

NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA)

Brief Overview:
NAFTA, The North American Free Trade Agreement, came into existence on January 1, 1994. NAFTA is essentially a free-trade agreement between the 3 North American nations of the Unites States, Canada, and Mexico. The major thought behind this treaty was to give the citizens and the companies of the North American nations many incentives to trade between themselves. The duties on U.S goods exported to Mexico were slashed by fifty percent, and other restrictions were to be detached from a lot of categories, such as motor vehicles, computers, automotive parts, and agricultural goods. NAFTA was also put into action so to safeguard the ...view middle of the document...

The agricultural sector of United States of America, however, has observed a largely positive effect as it has endeavored towards increased assimilation of markets in North America. This has additionally worked to improve the market attractiveness of the United States agricultural products. “From the start of the agreement through 96, total United States agricultural trade had increased quickly, rising from about $68 odd billion (exports $43 billion, imports $25 billion) to around $94 odd billion (exports $60 billion, imports $34 billion). In comparative terms, the share of trade with NAFTA partners had remained more or less stable at around 24 percent of total United States agricultural trade”.
b. Impact on Canadian Economy
Much of effect on Canada has been on similar lines as it has been for the US. The employees have grouses that their salaries are reducing as the enterprises in Canada are now planning for production plants etc in Mexico. In addition, other complaint has been that some of the clauses referred in the treaty do not allow the government of Canada to stop the sale of any commodity going forward if it has been sold once as a commodity.
“This no doubt pertains to the water from Canada's Great Lakes and rivers, stoking fears

over the possible devastation of the ecology of Canada and its water supply. Other worries come from the effects NAFTA has had on the country’s legal system”.
c. Impact on Mexican Economy
In the beginning, Mexico had aspired to benefit from NAFTA by an increase in the national output, reduced unemployment numbers, and rising trade with the United States. The NAFTA has, possibly, helped Mexico gain the most out of all the other 2 nations. This can mostly be best seen in the fast growth of the Mexican maquiladora business. “A maquiladora is a labor-intensive business that imports inputs, frequently from the United States, and then processes and exports them. Since maquiladoras frequently bond the bordering nations of United States and Mexican cities, these plants have been a few of the main beneficiaries of this agreement. In 1993, Maquiladoras accounted to just 2143. But 6 yrs hence, the total count of maquiladoras had risen 73 percent to 3703”. This illustrates that NAFTA has had a net positive influence on Mexico, more than any other country.

NAFTA: The Good, the Bad, and the Ugly:
As mentioned earlier, NAFTA to date continues to be controversial, much before its origin. The main quarrel that quite a few politicians have had against NAFTA is that they dread it would turn nations of the likes of Canada into full time branch plant economies. The farmers in Mexico have been resisting NAFTA since they are of the opinion that all the subsidies that the United States’ farmers get has a detrimental effect on the Mexican agricultural prices, which in turn is forcing a lot of the Mexican farmers out of business. A lot of sectors in Mexico have displayed a solid downward trend in the salaries. Quite a few...

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