Question

What were the main reasons for the United States, Canada, and Mexico to sign on to the original NAFTA? After more than 20 years, has NAFTA delivered the benefits expected? How might NAFTA be improved to the benefit of all three members’ countries?

Answer 1

Trade is normally an advantage; it helps raise living requirements, and it raises the level of financial activity on both sides. Yet sometimes there's a net transfer, and definitely the idea of winners and losers. Possibly the work would have gone to China or in other places; the majority of the workers would have moved to China. The U.S. had a $54 billion trade deficit with Mexico in 2013 however with China, it was a $318 billion deficit, so the U.S. deficit with China is five times bigger than with Mexico. In other words, you 'd say, maybe for every task we've lost to Mexico in the US, five jobs have been lost to China.

NAFTA's labor and environmental provisions were not included in the arrangement's primary text however were rather carried out as weak side offers that had no enforcement system. Among the main reasons companies operating in Mexico are more affordable is due to the fact that the country has lower labor and environmental requirements. Although all 3 nations accepted adapt their existing standards, Mexico has typically failed.

Increasing these requirements in Mexico will make the U.S. more competitive and pre-empt any competition down the line. NAFTA's chapters on labor and climate were not subject to the dispute settlement process of the contract. The TPP's labor and environmental chapters, which permitted the Member States to impose trade sanctions on nations that declined to meet their commitments, could be utilized as a guide to reinforcing Mexican dedications compliance.

To guarantee that goods originating from Mexico do not consist of intermediate parts from Asia, NAFTA's guidelines of origin mandate that a minimum quantity of North American content is needed to qualify for the lower tariffs of the open market arrangement. Provided the increasing globalization of the automobile market, it might be prudent to implement greater requirements for regional worth content to support U.S. production.