On December 17, 1992, leaders of the United States, Canada and Mexico signed the North American Free Trade Agreement or NAFTA. NAFTA was launched in January 1994. NAFTA eliminated all tariffs among its three member countries, creating as a result the largest free trade zone in the world. Building on the US-Canada Free Trade Agreement of 1988, NAFTA both widened and deepened the economic integration of North America. It was widened by the addition of Mexico’s 93 million people, and deepened by the scope of activities now subject to the regional arrangement. In addition to the elimination of all North American tariffs, NAFTA provided for a phased reduction of non-tariff barriers and a gradual convergence of economic regulation across the members border. The treaty’s provisions also covered investments rights and intellectual property protection. It was supplemented further by a series of “side agreements” dealing with import surges, labour condition and environmental standard.
Iowa Beef Processors (IBP), in 1994 was the twenty sixth largest exporter in the United States and the largest processors of beef and pork products in the world. The company’s export had soared over the past decade and the CEO, Mr. Robert Peterson was anxious to maintain this momentum. IBP projected that in 1995 their export would reach $1,800,000.00 a 20% increase from 1994 and four times the amount it had shipped a decade ago. Peterson believed that the passage of NAFTA could only help them to achieve their projected growth.
With the introduction of NAFTA in 1994, IBP moved quickly into the expanded North American Market. In 1994 after NAFTA came into being the company purchased Lakeside Farm Industries, the second largest meat processing firm in Canada and they also began exploring joint venture possibilities with Grupo Giante, Mexico’s third largest supermarket chain.
For Peterson and his colleague, with the introduction of NAFTA their move... [continues]
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