The Agreement Ended Many Trade Barriers

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Overall, NAFTA has not been devastating or transformative for the Canadian economy. Opponents of the 1988 free trade agreement warned that Canada would become a glorified 51st state. While this has not been done, Canada has also not closed the productivity gap with the United States. According to the OECD, the country`s GDP per hour worked was 74% of U.S. GDP in 2012. The North American Free Trade Agreement (NAFTA) was inspired by the success of the European Economic Community (1957-1993) in removing tariffs to stimulate trade among its members. Supporters argued that the creation of a free trade area in North America would bring prosperity through increased trade and production, resulting in the creation of millions of well-paying jobs in all participating countries. But while Mexico was “beating us economically” in the trade sense, imports were not the only ones responsible for the real growth in merchandise trade from 1993 to 2016, of 264%. Real exports to Mexico more than tripled during this period and increased by 213%; Imports, however, exceeded 317%. Because, in a way, Mexico beats the United States at the border. Prior to NAFTA, the merchandise trade balance between the two countries was modest in favour of the United States. In 2018, Mexico sold more than $72 billion more to the United States than it bought from its northern neighbor. NAFTA is a huge and extremely complicated agreement.

A look at economic growth can lead to one conclusion, while a look at the trade balance leads to another. While the impact of NAFTA is not easy to understand, some winners and losers are fairly clear. The second parallel agreement is the North American Environmental Cooperation Agreement (NAAEC), which established the Commission for Environmental Cooperation (CEC) in 1994. The CEC is responsible for strengthening regional cooperation in the environmental field, reducing potential trade and environmental conflicts and promoting effective enforcement of environmental legislation. It also facilitates public cooperation and participation in efforts to promote conservation, protection and improvement of the North American environment. It consists of three main components: the Council (Minister of the Environment), the Joint Advisory Committee of Governments (JPAC) and the Secretariat, which is headquartered in Montreal. It has an annual budget of $9 million, with Canada, Mexico and the United States contributing $3 million per year and settled by consensus (non-majority). Nevertheless, there is something great about this confusion between NAFTA and the letters of globalization.

The agreement “launched a new generation of trade agreements in the Western Hemisphere and other parts of the world,” the CRS writes, so NAFTA has rightly become an acronym for 20 years of broad diplomatic, political and trade consensus that free trade is generally a good thing. The CUSMA results, signed on the sidelines of the G20 of Heads of State and Government in Buenos Aires in November 2018, preserve key elements of long-term trade relations and contain new and updated provisions to address 21st century trade issues and foster opportunities for the nearly half a billion people who call North America at home. When Bill Clinton signed the nafta law in 1993, he said the trade agreement signed “jobs.”