NAFTA Essay Research Paper The North American

NAFTA Essay, Research Paper

The North American Free Trade Agreement (NAFTA), which built on the 1989

U.S.-Canada Free Trade Agreement (CFTA), is the most comprehensive regional free

trade agreement ever negotiated. It created the world’s largest free trade area:

380 million people producing nearly $8 trillion dollars worth of goods and

services. On January 1, 1994 the North American Free Trade Agreement entered

into force. One of the main objectives of the Agreement is the elimination of

tariffs between Canada, Mexico and the United States on "qualifying"

goods by the year 1998 for originating goods from Canada and for originating

goods from Mexico by the year 2008. Positive Effects on NAFTA Growth in Trade:

A+ Total North American trade increased from $293 billion in 1993 to $420

billion in 1996, a gain of $127 billion or 43 percent during NAFTA’s first three

years. Mexico and Canada purchased $3 of every $10 in U.S. exports and supplied

$3 of every $10 in U.S. imports in 1996. Growth in U.S. Exports: A+ Thanks to

NAFTA, Mexican tariffs.which had averaged 10 percent before the trade

agreement was implemented.now average less than 6 percent, while average U.S.

tariffs have fallen from 4 percent to about 2.5 percent. As a result, U.S.

exports to Mexico grew by 37 percent from 1993 to 1996, reaching a record $57

billion.3 During this period, U.S. exports to Canada also increased by 33

percent, to $134 billion. Total two-way trade between the United States and

Canada was $290 billion in 1996, while total two-way trade between the United

States and Mexico was nearly $130 billion. Moreover, U.S. market share in Mexico

increased from 69 percent of total Mexican imports in 1993 to 76 percent in

1996. During NAFTA’s first three years, 39 of the 50 states increased their

exports to Mexico; moreover, 44 states reported a growth in exports to Mexico

during 1996 as the pace of U.S. exports to that country accelerated. NAFTA has

shattered the myth that U.S. trade deficits destroy U.S. jobs. The combined U.S.

trade deficit with Canada and Mexico increased during the first three years of

NAFTA’s implementation.from $9 billion in 1992 to $39.9 billion in

1996.because Canada and Mexico suffered economic recessions. U.S. exports to

NAFTA countries currently support 2.3 million U.S. jobs. The largest post-NAFTA

gains in U.S. exports to Mexico have been in such high-technology manufacturing

sectors as transportation and electronic equipment, industrial machinery,

plastics and rubber, fabricated metal products, and chemicals. NAFTA has

encouraged U.S. and foreign investors with apparel and footwear factories in

Asia to relocate their production operations to Mexico. U.S. Compliance with

NAFTA: B In December 1995, the Clinton Administration postponed indefinitely the

implementation of a NAFTA deadline to allow Mexican trucks to circulate in the

southwest United States. U.S.-Mexico Trade Relations: B President Clinton’s

first official trip to Mexico this month came at a time in which relations

between the two countries were at their lowest point in years. The trade and

investment growth achieved during NAFTA’s first three years has been eclipsed by

the peso crisis and political turmoil in Mexico and by growing bilateral

tensions over drug control policy, immigration, and the Helms-Burton Act’s

tightening of economic sanctions against Cuba. These tensions in U.S. Mexico

relations have surfaced because the Clinton Administration did not assign a

sufficiently high priority to Mexico during its first term in office. NAFTA,

however, was never intended to be anything other than a free trade agreement.a

three-way pact by the United States, Mexico, and Canada to eliminate all tariff

and non-tariff barriers to trade over a period of 10 to 15 years. NAFTA was

designed to encourage faster growth in North American trade and investment,

which it has been doing successfully since January 1, 1994. Reform Process in

Mexico: A One of NAFTA’s important achievements has been to "lock in"

the process of economic and political reform under way in Mexico for the past

decade. Mexico’s membership in NAFTA, the World Trade Organization, the

Asia-Pacific Economic Cooperation forum, and the Organization for Economic

Cooperation and Development has created international commitments and linkages

that it cannot ignore. Even though The Heritage Foundation’s 1997 Index of

Economic Freedom still accords Mexico a ranking of 3.35, or "Mostly Not

Free,"12 Mexico has become a more democratic country since NAFTA was

implemented. Negative Effects on NAFTA On the Mexican Side: Pa.l Picard del

Prado, president of the Food Board at the National Manufacturing Industry

Chamber (Canacintra), says the first five years of the North American Trade

Agreement (Nafta) have been good for Americans, but not for Mexicans.

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