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