NAFTA || North American free trad agreement || Highlights Of NAFTA || Opposition to NAFTA

 

NAFTA

The North American Free Trade Agreement (NAFTA) was implemented in order to promote trade between the U.S., Canada, and Mexico. The agreement, which eliminated most tariffs on trade between the three countries, went into effect on January 1, 1994. Numerous tariffs–particularly those related to agriculture, textiles, and automobiles–were gradually phased out between January 1, 1994 and January 1, 2008.

NAFTA was supplemented by two other regulations: the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC). These tangential agreements were intended to prevent businesses from relocating to other countries to exploit lower wages, more lenient worker health and safety regulations, and looser environmental regulations.

Highlights of NAFTA

·      Tariff elimination for qualifying products. Before NAFTA, tariffs of 30 percent or higher on export goods to Mexico were common, as were long delays caused by paperwork. Additionally,

·         Elimination of nontariff barriers by 2008.

·         Establishment of standards. The three NAFTA countries agreed to toughen health, safety, and industrial standards to the highest existing standards among the three countries (which were always U.S. or Canadian).

·        Tariff reduction for motor vehicles and auto parts and automobile rules of origin.

·         Expanded telecommunications trade.

·         Reduced textile and apparel barriers.

·       More free trade in agriculture. Mexican import licenses were immediately abolished, with most additional tariffs phased out over a 10-year period.

·         Expanded trade in financial services.

·        Opening of insurance markets.

·         Increased investment opportunities.

·         Liberalized regulation of land transportation.

·         Expanded the rights of American firms to make bids on Mexican and Canadian government procurement contracts.

OPPOSITION TO NAFTA

Much organized opposition to NAFTA centered on the fear that the abolishment of trade barriers would spur U.S. firms to pack up and move to Mexico to take advantage of cheap labor. This concern grew during the early years of the 2000s as the economy went through a recession and the recover that followed turned out to be a "jobless recovery." Opposition to NAFTA was also strong among environmental groups, who contended that the treaty's anti-pollution elements were woefully inadequate. This criticism has not abated since NAFTA's implementation. Indeed, both Mexico and Canada have been repeatedly cited for environmental malfeasance.

Controversy over the treaty's environmental enforcement provisions remained strong in the late 1990s. In fact, North American business interests have sought to weaken a key NAFTA side accord on environmental protections and enforcement. This accord-;one of the few provisions welcomed by environmental groups-;allows groups and ordinary citizens to accuse member nations of failing to enforce their own environmental laws. A tri-national Commission for Environmental Cooperation is charged with investigating these allegations and issuing public reports. "That process is slow, but the embarrassment factor has proven surprisingly high," noted Business Week. As of 2005, the U.S. government has expressed opposition to revisions in the NAFTA agreement. But the Canadian government and many businesses in all three countries continue to Regional integration.