What is NAFTA?
The North American Free Trade Agreement (NAFTA) is a trilateral trading bloc between the
United States, Canada, and Mexico that will lower tariffs to have a tax-free trade. NAFTA began
when President Ronald Regan proposed a North American common market in his campaign
during the 1980s. Together with Canadian Prime Minister Brian Mulroney, the two leaders
began negotiations for the Canada - US Free Trade Agreement which was later signed in 1988
and took effect a year after in 1989. After President Regan, his successor President George W.
Bush began negotiations with the Mexican President Carlos Salinas for a more liberalized trade
agreement between the US and Mexico.
Canada requested a trilateral free trade agreement between the US and Mexico in 1991, which
then led to the formation of NAFTA. In 1992, NAFTA was signed by the three leaders of the
states. It was then ratified by the three countries in 1993.
December 8, 1993, President Bill Clinton signed NAFTA into law. NAFTA came into effect on
January 1, 1994 through bilateral trade negotiations and officially signed by Prime Minister Brian
Mulroney, Mexican President Carlos Salinas, and U.S. President George W. Bush.
NAFTA and its Seven Specific Goals
1. Grant the signatories most favored nation status.
2. Eliminate barriers to trade and facilitate the cross-border movement of goods and
3.
4.
5.
6.
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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 the trade agreement's benefits.
Basic principles
- Help develop and expand world trade and provide a catalyst to widen international cooperation
-Increase cooperation for improving working conditions in North America
-Create a safe market for goods and services that is produced in North America
-reduce trade barriers
Thesis Statement: The negative effects from the North American Free Trade Agreement towards
the member states (Canada, USA, Mexico) outweighs the positive effects.
Mercantilism
Positive effects
1. It increased trade between the U.S., Mexico, and Canada
a. Trade between 3 countries quadrupled
2. Lowered Prices
a. Lowered Prices for oil and food
3. Opens up new opportunities
b. Opportunity for small to mid-sized businesses
Negative Effects
1. U.S. Jobs were lost
a. 500,000-750,000 jobs were lost (Mostly on manufacturing industries)
b. Moved to mexico because of cheaper labor
2. Mexican farmers went out of business
a. It allowed the entry of U.S. farm products wherein they could not compete with
the low price
3. Deterioration of Mexico’s environment
a. Entry of U.S. companies degraded Mexico’s environment
4. Only enhanced the economy of the U.S., not all the member states
Negative Cases
1. NAFTA and the Maquiladoras
A Maquiladora is a factory that operates under special Mexican customs which is
established and operated by the United States and Mexico. It is an assembly plant that
imports materials and equipment on a duty-free and tariff-free basis for assembly or
manufacture for export. Maquiladoras receive raw materials from companies in the U.S.
to assemble and export back as finished products. The Maquiladora Program allows the
company to foreign investment participation in the capital and in management of up to
100%. The program was developed to foster border region employment rates as well as
further attract foreign investment.
References
Baz, A. G. (n.d.). Manufacturing In Mexico: The Mexican In-Bond (Maquila) Program. Retrieved
from http://www1.udel.edu/leipzig/texts2/vox128.htm
Government of Canada, Foreign Affairs Trade and Development Canada. (2017, June 08).
North American Free Trade Agreement (NAFTA) - Fast Facts. Retrieved from
http://international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agracc/nafta-alena/fta-ale/facts.aspx?lang=eng
United States Trade Representative. (n.d.). North American Free Trade Agreement (NAFTA).
Retrieved from https://ustr.gov/trade-agreements/free-trade-agreements/north-american-freetrade-agreement-nafta
Amadeo, K. (n.d.). What Is the History and Purpose of NAFTA? Retrieved July 16, 2017, from
https://www.thebalance.com/history-of-nafta-3306272
Home. (n.d.). Retrieved July 16, 2017, from https://globaledge.msu.edu/trade-blocs/nafta