NAFTA

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Wilfrid Laurier University *

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105

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Political Science

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Jan 9, 2024

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pdf

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3

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What is the purpose of the agreement? To encourage trade between the United States, Mexico, and Canada, the North American Free Trade Agreement (NAFTA) was passed into law. NAFTA resulted in the reduction or elimination of import and export duties between the three signing nations, creating a significant free-trade zone. To prevent businesses from moving to other nations in search of lower wages or fewer laws, NAFTA was created to create high shared standards in workplace safety, labour rights, and environmental protection. Trade promotion among North America's three major economic powers—Canada, the United States, and Mexico was the main objective of NAFTA. Supporters of the pact claimed that it would increase free trade and reduce tariffs between Canada, Mexico, and the United States, which would be beneficial to all three parties. How did the agreement come into existence? In 1994, the North American Free Trade Agreement (NAFTA) was enacted to promote trade between the United States, Mexico, and Canada. NAFTA was drafted as the first step of George H. W. Bush's Enterprise for the Americas Initiative during his presidency. Because exports play a big role in U.S. economic growth, the Clinton administration signed NAFTA into law, anticipating it would produce 200,000 jobs in two years and one million in five years. https://www.investopedia.com/terms/n/nafta.asp What are the key features of the agreement? -Tariff elimination for qualifying products. When the deal went into force, around half of the duties were eliminated immediately, with the other levies being phased out over time. -Elimination of nontariff barriers by 2008. The border and interior of Mexico to U.S. truckers and streamlining border processing and licensing requirements were opened. -Establishment of standards. Member countries have pledged to raise their health, safety, and industrial standards to the highest levels possible (which were always U.S. or Canadian). Furthermore, national norms could no longer be used as a trade barrier. -Inspections and certificates of export products were also accelerated. -Supplemental agreements. The three nations agreed to form commissions to deal with labor and environmental issues. The commissions have the authority to levy heavy fines on any of the three governments that do not follow the rules regularly. -Tariff reduction for motor vehicles and auto parts and automobile rules of origin. -Expanded telecommunications trade. -Reduced textile and apparel barriers. -More free trade in agriculture. Mexican import licenses were immediately abolished, with most additional tariffs phased out over a 10-year period. -Expanded trade in financial services. -Opening of insurance markets. -Increased investment opportunities.
-Liberalized regulation of land transportation. -Increased protection of intellectual property rights. -Expanded the rights of American firms to make bids on Mexican and Canadian government procurement contracts https://www.inc.com/encyclopedia/north-american-free-trade-agreement-nafta.html Are there methods of dispute resolution included? The North American Free Trade Agreement (NAFTA) established institutional processes for resolving trade disputes. Chapters 11, 14, 19, and 20 detail the main dispute resolution processes. Chapter 11 deals with investment conflicts, while Chapter 14 deals with service disputes. Which countries are member countries? USA, Canada and Mexico. What are the benefits and the drawbacks of the agreement? Benefits: (other than those mentioned in the key features) NAFTA's primary goal was to boost cross-border trade in North America, and it succeeded in doing so by lowering or eliminating tariffs between its three member countries. It benefited small and mid-size firms in particular because it reduced costs and eliminated the need for a company to have a physical presence in a foreign country in order to do business there. The other benefits are it spurred surge in cross-border trade and investment, increased competitiveness of U.S. industry, opened up opportunities for small businesses and it implemented universal, higher health, safety, and environmental standards. Drawbacks? Despite the supplemental NAALC, critics of NAFTA were afraid that the pact would result in U.S. jobs being relocated to Mexico due to cheaper labor costs there. Critics also point to the increased number of Mexican immigration to the United States as a result of NAFTA, partly because the projected wage convergence between the United States and Mexico did not occur, making the United States more appealing to Mexican workers. Inflation rate went up also. Do you think that this agreement is positive for Canada? Why or why not? The agreement is positive for Canada because it has created new export prospects, functioned as a catalyst for the development of globally competitive enterprises, and assisted in the
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