Question

In: Economics

Did US, Mexico, or Canada benefit most from NAFTA? Which benefited the least? Explain

Did US, Mexico, or Canada benefit most from NAFTA? Which benefited the least? Explain

Solutions

Expert Solution

The North American Free Trade Agreement (NAFTA) is a pact eliminating most trade barriers between the U.S., Canada, and Mexico that went into effect on January 1, 1994. Some of its provisions were implemented immediately, while others were staggered over the 15 years that followed. NAFTA went into effect under the Clinton administration in 1994. The purpose of the deal was to boost trade within North America between Canada, the United States, and Mexico. It also aimed to get rid of trade barriers between the three parties, as well as most taxes and tariffs on goods imported and exported by each.The idea of a trade agreement actually goes back to Ronald Reagan's administration. While president, Reagan made good on a campaign promise to open up trade within North America by signing the Trade and Tariff Act in 1984. This gave the president more negotiate trade deals without any hitches. Four years later, Reagan Canadian prime minister signed the Canada-U.S. Free Trade Agreement.NAFTA was actually negotiated by Bill Clinton's predecessor, George H.W. Bush, who decided he wanted to continue talks to open up trade with the U.S. Bush originally tried to generate an agreement between the U.S. and Mexico, but President Carlos Salinas de Gortari pushed for a trilateral deal between the three countries. After talks, Bush, Mulroney, and Salinas signed the deal in 1992, which went into effect two years later after Clinton was elected president.The North American Free Trade Agreement (NAFTA) was a three-country accord negotiated by the governments of Canada, Mexico, and the United States that entered into force in January 1994. NAFTA eliminated most tariffs on products traded between the three countries, with a major focus on liberalizing trade in agriculture, textiles, and automobile manufacturing. The deal also sought to protect intellectual property, establish dispute resolution mechanisms, and, through side agreements, implement labor and environmental safeguards. NAFTA fundamentally reshaped North American economic relations, driving unprecedented integration between the developed economies of Canada and the United States and Mexico’s developing one. In the United States, NAFTA originally enjoyed bipartisan backing; it was negotiated by Republican President George H.W. Bush, passed by a Democratic-controlled Congress, and was implemented under Democratic President Bill Clinton. Regional trade tripled under the agreement, and cross-border investment among the three countries also grew significantly.
Yet NAFTA was a perennial target in the broader debate over free trade. President Donald J. Trump says it undermined U.S. jobs and manufacturing, and in December 2019, his administration completed an updated version of the pact with Canada and Mexico, now known as the U.S.-Mexico-Canada Agreement (USMCA). The USMCA won broad bipartisan support on Capitol Hill and entered into force on July 1, 2020. The North American Free Trade Agreement (NAFTA) is a treaty entered into by the United States, Canada, and Mexico; it went into effect on January 1, 1994. (Free trade had existed between the U.S. and Canada since 1989; NAFTA broadened that arrangement.) On that day, the three countries became the largest free market in the world-;the combined economies of the three nations at that time measured $6 trillion and directly affected more than 365 million people. NAFTA was created to eliminate tariff barriers to agricultural, manufacturing, and services; to remove investment restrictions; and to protect intellectual property rights. This was to be done while also addressing environmental and labor concerns (although many observers charge that the three governments have been lax in ensuring environmental and labor safeguards since the agreement went into effect). Small businesses were among those that were expected to benefit the most from the lowering of trade barriers since it would make doing business in Mexico and Canada less expensive and would reduce the red tape needed to import or export goods.Passage of NAFTA resulted in the elimination or reduction of barriers to trade and investment between the U.S., Canada, and Mexico. The effects of the agreement regarding issues such as employment, the environment, and economic growth have been the subject of political disputes. Most economic analyses indicated that NAFTA was beneficial to the North American economies and the average citizen, but harmed a small minority of workers in industries exposed to trade competition. Economists held that withdrawing from NAFTA or renegotiating NAFTA in a way that reestablished trade barriers would've adversely affected the U.S. economy and cost jobs. However, Mexico would've been much more severely affected by job loss and reduction of economic growth in both the short term and long term.


Related Solutions

Has NAFTA been good for Canada, Mexico, and the US? What changes, if any, should be...
Has NAFTA been good for Canada, Mexico, and the US? What changes, if any, should be made to the agreement, and why?
Has NAFTA been good for Canada, Mexico, and the US? What changes, if any, should be...
Has NAFTA been good for Canada, Mexico, and the US? What changes, if any, should be made to the agreement, and why?
2. The U.S., Mexico and Canada recently renegotiated the NAFTA accord, which will now become the...
2. The U.S., Mexico and Canada recently renegotiated the NAFTA accord, which will now become the USMCA. What stage of regional integration is represented by NAFTA or the USMCA? What are the four steps that follow, leading to deeper integration? Explain how the loss of autonomy can work against the advancement of integration at each stage. In Kahler’s article on integration, he questioned the “world of blocs” that supposedly has arisen. What was the main contention in this article about...
Did NAFTA fail Mexico? What objective data is there to show whether NAFTA was a relative...
Did NAFTA fail Mexico? What objective data is there to show whether NAFTA was a relative success or a relative failure? Was Mexico better off or worse off as a result of NAFTA? How do you know?
Is the new trade agreement negotiated by President Trump with Mexico and Canada to replace NAFTA...
Is the new trade agreement negotiated by President Trump with Mexico and Canada to replace NAFTA more beneficial or more harmful to the United States economy than NAFTA?
What has not changed from NAFTA to USMCA? Is USMCA better for Mexico compared with NAFTA?...
What has not changed from NAFTA to USMCA? Is USMCA better for Mexico compared with NAFTA? Is the Mexican government likely to approve the USMCA?
NAFTA is a multilateral trade agreement between Canada, United States, and Mexico enacted in the 1990's....
NAFTA is a multilateral trade agreement between Canada, United States, and Mexico enacted in the 1990's. This agreement eliminates trade barriers between these countries and allows trade to move freely without tariffs or restrictions. However, there is a downside to this. Look at "in the News" on pg. 782 of the text on jobs relating to NAFTA. How do agricultural workers feel about this agreement? How about construction workers? The comparative advantage in these countries has changed due to NAFTA....
Compare the North American Free Trade Agreement (NAFTA) and the United States-Mexico-Canada Agreement (USMCA). How are...
Compare the North American Free Trade Agreement (NAFTA) and the United States-Mexico-Canada Agreement (USMCA). How are they different? Are these changes likely to lead to material changes for Canada?
Why might the United States want to renegotiate its commitments under NAFTA? What about Canada? Mexico?...
Why might the United States want to renegotiate its commitments under NAFTA? What about Canada? Mexico? What advice would you give those involved in negotiations in light of the possibility that domestic policies can favor certain industries, giving them an unfair competitive advantage in global markets?
What role did NAFRA play in Mexico-US migration?
What role did NAFRA play in Mexico-US migration?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT