Question

Give your opinion on which country will benefit the most from the new trade agreement (USMCA) which replaced NAFTA. Provide specific support for your opinion. What was wrong with NAFTA, and did it do what it was supposed to do?

Answer 1

North America will benefit the most from new trade agreement USMCA---United States Maxico Canada Agreement

NAFTA ( North American Free Trade Agreement in Jan, 1994 was a trade deal between Canada,Maxico and United States to eliminate most tariffs on products traded between the three countries.It had major fucus on liberalizing trade in agriculture ,automobile manufacturing and textile industry.

President Donald Trump called NAFTA ,the 'WORST TRADE DEAL EVER MADE' and renegotiated it as the USMCA-----------------United States -Maxico-Canada Agreement

It is a trade deal between US ,Maxico and Canada, three countries ,which was signed on November 30,2018 which is supposed to be a beneficial win for North American workers ,farmers,ranchers and businesses.

While NAFTA aimed at creating a free zone between US,Canada and Mexico,the USMCA utilises NAFTA as a basis for a new agreement .It has a broad impact on trade of all kinds betweven three nations.

Wrong with NAFTA

NAFTA was critised on the following gounds----

# It had a negetive impact on both America and Mexican workers

# US jobs were lost since labour is much cheaper in Maxico.Due to this, many manufacturing industries withdrew part of their production from the high cost US

# Adverse effect on Maxico farmers occured due to this trade agreement under which Maxico lost nearly 1.3 million farm jobs,.The reason was that after implementation of NFTA, as the free trade was allowed,companies exported corns and other grains to Maxico below cost to which poor maxican farmers couldn't compete.

# Environmental effects in Maxico were visible due to competitive pressure as Maxican agribusiness used more fertilizers and other chemicals in their farms.

Benefits expected from USMCA

# Dairy and Agriculture Reforms---- The USMCA will increase US farmers' access to Canadian dairies,thus the goods produced in US can be freely exported to Canada tariff free.

#Relief to Automobiles- industry--- Under NAFTA, cars and trucks with atleast 62.5% of their components manufactured in one of the three participating countries could be sold tariff free while under USMCA ,this limit has been increased to 75%

# Labour Reforms----- Under USMCA, an investigatory panel is set up to investigate the factories violating the labour laws.

#Protection of Intellectual Property Rights--- The USMCA has increased the intellectual property protection .It extends the copyright period to 70 years beyond the life of the creator.The new agreement prohibits tariff on digital music,e- books and other digital products.

SO, THESE WERE THE REASONS WHICH LED TO REPLACEMENT OF NAFTA WITH USMCA TRADE AGREEMENT.