An Expected Consequence of the Implementation of the North American Free Trade Agreement Was

NAFTA fundamentally changed North American economic relations, resulting in unprecedented integration between the developed economies of Canada and the United States and the developing economy of Mexico. In the United States, NAFTA originally enjoyed bipartisan support; it was negotiated by Republican President George H.W. Bush, passed by a Democratic-controlled Congress and implemented under Democratic President Bill Clinton. Regional trade tripled under the agreement and cross-border investment between the three countries also increased significantly. It is impossible to isolate the effects of NAFTA within the economy as a whole. For example, it is difficult to say with certainty what percentage of the current U.S. trade deficit, which stood at a record $65,677 million at the end of 2005, is directly attributable to NAFTA. It`s also unclear what percentage of the 3.3 million manufacturing jobs in the U.S. will be lost. between 1998 and 2004 are the result of NAFTA and what percentage would have occurred without this trade agreement. It is not even certain that the increase in trade activity between NAFTA countries is entirely due to the trade agreement. Those who support the agreement generally call for recognition of NAFTA for increased trade activity and reject the idea that the agreement has led to job losses or increased trade deficits with Canada and Mexico ($8,039 million and $4,263 million, respectively, in December 2005). Critics of the deal generally associate it with these shortcomings and job losses.

Progress has been made on a number of issues under consideration, including telecommunications, pharmaceuticals, chemicals, digital trade and anti-corruption regulation. But the way the origin of auto content is measured has emerged as a sticking point as the U.S. fears an influx of Chinese auto parts. The negotiations are further complicated by a lawsuit filed by Canada against the United States in December. A 2007 study found that NAFTA had “a significant impact on the volume of international trade, but a modest effect on prices and prosperity.” [62] Some small businesses have been directly affected by NAFTA. In the past, large companies still had an advantage over small ones because large companies could afford to build and maintain offices and/or manufacturing facilities in Mexico, thus avoiding many of the old trade restrictions on exports. In addition, pre-NAFTA laws required U.S. service providers who wanted to do business in Mexico to establish a physical presence there, which was simply too expensive for small businesses. Small businesses were stuck – they didn`t have the means to build, nor the export tariffs. NAFTA paved the way by allowing small businesses to export to Mexico at the same cost as large companies and by eliminating the requirement that a company establish a physical presence in Mexico to do business there. The lifting of these restrictions meant that huge new markets were suddenly opened up to small businesses that previously operated only in the United States. This was seen as particularly important for small businesses that were producing goods or services that had matured in U.S.

markets. On the other hand, Canada has long sold 99% or more of its total oil exports to the United States: it did so even before the two countries signed a free trade agreement in 1988. In other words, NAFTA does not appear to have done much to open up the U.S. market to Canadian crude. It was already wide open – Canadians were just producing more. According to a 2018 Sierra Club report, Canada`s commitments under NAFTA and the Paris Agreement were at odds. The Paris commitments were voluntary and NAFTA was mandatory. [65] NAFTA is often blamed for things that could not have been its fault.

In 1999, the Christian Science Monitor wrote about an Arkansas town that it would “collapse, some said, like so many NAFTA ghost towns that have lost jobs in needle trading and manufacturing to places like Sri Lanka or Honduras.” Sri Lanka and Honduras are not parties to the Agreement. It is difficult to find a direct link between NAFTA and general employment trends. The Economic Policy Institute, which is partly funded by the union, estimated that in 2013, 682,900 net jobs were displaced by the U.S. trade deficit with Mexico. In a 2015 report, the Congressional Research Service (CRS) said NAFTA “did not cause the huge job losses feared by critics.” On the other hand, it acknowledged that “in some sectors, trade-related effects could have been greater, particularly in sectors that were more exposed to the elimination of tariff and non-tariff barriers, such as the textile, clothing, automotive and agricultural industries”. Agriculture, in particular, has seen a boost. .