The North American Free Trade Agreement or NAFTA , French is an agreement signed by the governments of the United States, Canada, andMexico creating a trilateral trade bloc in North America
North American Free Trade Agreement
OBJECTIVEThe objectives of this Agreement are to:
establish a free trade area in accordance with this Agreement;
promote regional integration through an instrument that contributes to the establishment of the Free Trade Area of the Americas (FTAA) and to the progressive elimination of barriers to trade and investment;
create opportunities for economic development;
eliminate barriers to trade in, and facilitate the cross-border movement of goods between the territories of the Parties;
increase substantially investment opportunities in the territories of the Parties;
facilitate trade in services and investment with a view to developing and deepening the Parties' relations under this Agreement;
promote conditions of fair competition in the free trade area;
establish a framework for further bilateral, regional and multilateral cooperation to expand and enhance the benefits of this Agreement; and
create effective procedures for the implementation and application of this Agreement, for its joint administration and for the resolution of disputes.
The Parties shall interpret and apply the provisions of this Agreement in the light of its objectives set out in paragraph 1 and in accordance with applicable rules of international law.
NAFTA is short for the North American Free Trade Agreement. NAFTA covers Canada, the U.S. and Mexico making it the worlds largest free trade area in terms of GDP. As of January 1, 2008, all tariffs between the three countries have have been eliminated. Between 1993-2007, trade tripled from $297 billion to $930 billion.
TheNorth American Free Trade AgreementorNAFTA,French is an agreement signed by the governments of theUnited States,Canada, and Mexicocreating a trilateraltrade blocinNorth America. The agreement came into force on January 1, 1994. It superseded theCanada-United States Free Trade Agreementbetween the U.S. and Canada. In terms of combinedpurchasing power parityGDPof its members, as of 2007the trade block is thelargest in the worldand second largest by nominal GDP comparison.
The North American Free Trade Agreement (NAFTA) has two supplements, theNorth American Agreement on Environmental Cooperation(NAAEC) and theNorth American Agreement on Labor Cooperation(NAALC).
NAFTA's namingAmerican intellectualNoam Chomskyhas argued that the only true words in the phrase "North American Free Trade Agreement" seem to be "North America", as what is called trade is in reality mostly restricted intra-corporate transfers of products and services. Agreement is lacking as NAFTA was passed with a lack of democratic oversight protocols and widespread public opposition. Adam Smith, states inThe Wealth of Nationsthat free trade includes the labor component as a factor of production:
"By obstructing the free circulation of labour and stock both from employment to employment, and from place to place, occasions in some cases a very inconvenient inequality in the whole of the advantages and disadvantages of their different employments." Within NAFTA official law and agreementsthe movement of labor is temporary and veryrestrictive, especially for unskilled workers.Mexican (legal and illegal) migration to the USA is surging, but not due to NAFTA provisions.NAFTA provisions for freedom of movement of workers are very restrictive compared to one of theeconomic freedoms of the European Union, the freedom of movement for workers.When Was NAFTA Started?
NAFTA was signed by U.S. President George H.W. Bush, Mexican President Salinas, and Canadian Prime Minister Brian Mulroney in 1992. It was ratified by the legislatures of the three countries in 1993. The U.S. House approved it by 234 to 200 on November 17 and the Senate by 60 to 38 on November 20. It was signed into law by President Bill Clinton on December 8, 1993 and entered force January 1,1994. Although it was started by President Bush, it was a priority of President Clinton's, and its passage is considered one of his first successes. (Source: History.com, NAFTA Signed into Law, December 8, 1993.How Was NAFTA Started?
The impetus for NAFTA actually began with President Ronald Regan, who campaigned on a North American common market. In 1984, Congress passed the Trade and Tariff Act. This is important because it gave the President "fast-track" authority to negotiate free trade agreements, while while only allowing Congress the ability to approve or disapprove, not change negotiating points. Canadian Prime Minister Mulroney agrees with Reagan to begin negotiations for the Canada-U.S. Free Trade Agreement, which was signed in 1988, went into effect in 1989 and is now suspended due to NAFTA. (Source: NaFina, NAFTA Timeline)
Meanwhile, Mexican President Salinas and President Bush began negotiations for a liberalized trade between the two countries. Prior to NAFTA, Mexican tariffs on U.S. imports were 250% higher than U.S. tariffs on Mexican imports. In 1991, Canada requests a trilateral agreement, which then led to NAFTA. In 1993, concerns about liberalization of labor and environmental regulations led to the adoption of two addendums to NAFTA.
Why Was NAFTA Formed?
Article 102 of the NAFTA agreement outlines its purpose:
Grant the signatories Most Favored Nation status.
Eliminate barriers to trade and facilitate the cross-border movement of goods and services.
Promote conditions of fair competition.
Increase investment opportunities.
Provide protection and enforcement of intellectual property rights.
Create procedures for the resolution of trade disputes.
Establish a framework for further trilateral, regional and multilateral cooperation to expand NAFTA's benefits.
BackgroundIn 1988 Canada and the United States signed theCanada-United States Free Trade Agreement. The American government then entered into negotiations with the Mexican government for a similar treaty, and Canada asked to join the negotiations in order to preserve its perceived gains under the 1988 deal.The international climate at the time favoured expanding trade blocs, and theMaastricht Treatywhich created theEuropean Unionwas signed in 1992.
Following diplomatic negotiations dating back to 1991 between the three nations, the leaders met inSan Antonio, Texas, on December 17, 1992, to sign NAFTA. U.S. PresidentGeorge H.W. Bush, Canadian Prime MinisterBrian Mulroneyand Mexican PresidentCarlos Salinas, each responsible for spearheading and promoting the agreement, ceremonially signed it. The agreement then needed to be ratified by each nation's legislative or parliamentary branch.
Before the negotiations were finalized,Bill Clintoncame into office in the U.S. andKim Campbellin Canada, and before the agreement became law,Jean Chrtienhad taken office in Canada.
The proposed Canada-U.S.trade agreement had been extremely controversial and divisive in Canada, and the1988 Canadian electionwas fought almost exclusively on that issue. In that election more Canadians voted for anti-free trade parties (theLiberalsand theNew Democrats) but more seats in parliament were won by the pro-free tradeProgressive Conservatives(PCs). Mulroney and the PCs had aparliamentary majorityand were able to easily pass the Canada-U.S. FTA and NAFTA bills. However Mulroney himself had become deeply unpopular and resigned on June 25, 1993. He was replaced as Conservative leader and prime minister byKim Campbell, who then led the PC party into the1993 electionwhere they were decimated by the Liberals underJean Chrtien. Chrtien had campaigned on a promise to renegotiate or abrogate NAFTA, but instead negotiated the two supplemental agreements with the new U.S. Democratic president, and ideological ally, Bill Clinton.Facts AboutNAFTA1. History of NAFTANAFTA is short for the North American Free Trade Agreement. NAFTA covers Canada, the U.S. and Mexico making it the worlds largest free trade area in terms of GDP. Three U.S. Presidents were involved in creating it over a decade. Find out how it was created, what its purpose was and how large it is today.
2. Advantages of NAFTANAFTA created the worlds largest free trade area, linking 439 million people and producing $15.3 trillion in goods and services annually. Estimates are that NAFTA will increase U.S. GDP by between .1% - .5%. Trade between the NAFTA signatories tripled, from $297 billion in 1993 to $903 billion in 2007. Find out what industries benefited, and how NAFTA specifically supported this increase in trade.
NAFTA created the worlds largest free trade area, linking 439 million people and producing $15.3 trillion in goods and services annually. Estimates are that NAFTA increases U.S. GDP by as much as .5% a year.
That's because its elimination of tariffs and agreements on international rights for business investors increases trade and capital, spurring business growth. Elimination of tariffs also reduces inflation, by decreasing costs of imports.
Increase in Trade:
Trade between the NAFTA signatories tripled, from $297 billion in 1993 to $903 billion in 2007. Specifically,U.S. goods exports to Canada and Mexico grew 157%, from $142 billion to $364.6 billion.Exports from Canada and Mexico to the U.S. grew 231%, from $151 billion in to $501 billion.NAFTA provides the ability for firms in member countries to bid on government contracts. It also protect intellectual properties.
Increase in U.S. Agricultural Exports:
NAFTA is especially helpful for agricultural exports because it reduces high Mexican