The NAFTA is an agreement that came into effect, in 1944. It created one of the world’s largest free trade zones and made the foundations for strong economic growth. The NAFTA has demonstrated how free trade increases wealth and competitiveness, delivering real benefits to families, farmers, workers, manufacturers, and consumers. The gross domestic product of its three members is more than $20 trillion.
1. Grants the most-favored nation status to co-signers
2. Eliminates tariffs on imports and exports between the three countries
3. NAFTA countries have to respect patents trademarks and copyrights
4. Exporters must get Certificates of Origin to waive tariffs
5. Establishes procedures to resolve trade disputes
What is the North American Free Trade? ( NAFTA )
What Countries were involved?
What industries/products does the NAFTA include?
NAFTA has impacted regional production of automobiles and auto parts, aircraft, and electrical machinery and plastics. It also targeted essential oils, wood, vegetables and fruits industries, clothing, textile industries, and natural gas. It basically impacted almost any industry the NAFTA countries could do trades with.
Impact on Economy
NAFTA produced a significant net benefit to Canada in 2003. Canada's productivity increased up by 15 percent in industries that experienced the deepest tariff cuts.
It tripled it's Canada's trade with the other countries involved in the NAFTA
Helped with government spending. Each nation's government contracts became available to suppliers. That increased competition and lowered costs.
Negatively, because of low-productivity plants, they reduced employment (up to 12 percent of existing positions). This affected the economy because job losses lasted less than a decade. Unemployment in Canada has fallen since then
It created more jobs in the economy because of the increase in trade
It lowered prices. U.S. oil imports from Mexico cost less because NAFTA got rid of tariffs. That reduces America's reliance on oil from the Middle East. Low-cost oil reduces gas prices, which reduces transportation cost. Food prices are lower in turn. It helped with economy spending
Because of the loss of jobs in Mexico, Mexican citizens started to immigrate to the US in need for jobs
Many American small businesses depend on exporting their products to Canada or Mexico under NAFTA. According to the U.S. Trade Representative, this trade supports over 140,000 small- and medium-sized businesses in the US. The Trade agreement did not harm the USA economy like in the other countries.
U.S. exports to Mexico have reached USD$38.5 billion in machinery, USD$36.7 billion in electrical machinery, USD$21.6 billion in vehicles, and USD$15.3 billion in plastics. This makes Mexico have more product imported into its economy
SInce NAFTA has rules about what percentage of a product must be produced in North America in order to enter the U.S., Mexico, or Canada tariff-free. Strict rules of origin make risk to Mexico since not all imports can be sourced orderly or in North America. This makes their products sometimes not be able to be traded.
Mexico did not invest in the infrastructure necessary for competition. Things like efficient railroads and highways. This resulted in more difficult living conditions for the country's poor. Mexico's agricultural exports increased 9.4 percent annually between 1994 and 2001, while imports increased by only 6.9 percent a year during the same period.
U.S.-Mexico trade increased almost six times, going from USD$88 billion in 1993 to USD$482 billion in 2016. There started to be a huge need for products in the economy.
Mexican farmers went out of business because farming products were being imported from the US