North American Free Trade Agreement (NAFTA)
Brief overview of NAFTA (mainly for in-class presentation) a.
NAFTA over the last 12 years
Impact on the U.S. economy
Jobs (Employment Growth)
Imports vs. Exports (Trade Deficit)
Impact on Canadian economy
Impact on Mexican economy
FDI (Foreign Direct Investment)
NAFTA - The Good, the bad and the ugly
NAFTA’s role going forward
What needs to be fixed?
Current Issues and Challenges
How do you fix it?
Solutions being considered
I. Brief Overview:
NAFTA, The North American Free Trade Agreement, came into existence on January 1, 1994. NAFTA is basically a free-trade agreement between the three North American countries of the Unites States, Canada, and Mexico. The main idea behind this treaty was to provide the people and the businesses of the North American countries many incentives to trade amongst each other. The duties on U.S goods shipped to Mexico were reduced by 50 percent, and other restrictions were to be removed from many categories, such as motor vehicles, computers, automotive parts, and agricultural goods. NAFTA was also put into action in order to protect the intellectual property rights of the businesses, such as patents, copyrights, and trademarks. Other supplemental agreements were also signed in later years, which allowed for worker and environmental protection. Although many people might think that the NAFTA is like the EU (European Union), it is quite different. NAFTA, unlike EU, does not set up a collection of supranational governmental bodies, nor creates any law that is superior to the national law of each of the member countries (Wikipedia; International Trade Canada).
II. NAFTA in the last 12 Years:
The signing of the NAFTA was a controversial issue, even before it came into existence. Many people still debate whether this was a good move and many have contemplated on the treaty’s effects on human rights, the environment, as well as the culture of the three countries
Impact on U.S. Economy
Perhaps the one sector of the U.S. economy that has been affected the most by the NAFTA is the labor union. Almost all of the labor unions in the US have opposed NAFTA because they fear that they would lose their jobs to the Mexicans because of lower wage rates there. The income of the workers has also been affected as the businesses have had to lower their wage rates in order to remain in competition with those which are producing in Mexico. The agricultural sector of USA, however, has seen an overall positive effect as it has worked towards greater integration of markets in North America. This has further worked to enhance the competitiveness of the U.S. agricultural products. “From implementation of NAFTA through 1996, total U.S. agricultural trade ha(d) grown rapidly, rising from nearly $68 billion (exports $43 billion, imports $25 billion) to about $94 billion (exports $60 billion, imports $34 billion). In relative terms, the share of trade with NAFTA partners ha(d) held steady at about 24 percent of total U.S. agricultural trade” (Raney and Shagam 1996). b.
Impact on Canadian Economy
Much of the impact on the Canadian economy has been the same as it has been for the US. The workers have complained that their wage rates are going down as the businesses in Canada are now looking to have their production plants etc in Mexico. In addition, other opposition has been presented to NAFTA since some of the clauses mentioned in the treaty disallow the Canadian government to stop the sale of any commodity in the future if it has been sold once as a commodity. “This of course applies to the water from Canada's Great Lakes and rivers, fueling fears over the possible...
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