What Is The Nafta Trade Agreement

Mexican politicians saw NAFTA as an opportunity to accelerate and block these hard-hit reforms in the Mexican economy. In addition to trade liberalization, Mexican leaders have reduced public debt, introduced a balanced budget rule, stabilized inflation and built up the country`s foreign exchange reserves. Although Mexico was hit hard by the 2008 financial crisis because of its dependence on exports to the U.S. market – the following year, Mexican exports to the United States fell by 17% and its economy fell by more than 6% – its economy rebounded fairly quickly and returned to growth in 2010. Shortly after his election, U.S. President Donald Trump said he would begin renegotiating NAFTA terms to resolve trade issues for which he campaigned. The heads of state and government of Canada and Mexico have expressed their willingness to cooperate with the Trump administration. [129] Although he vaguely formulated the precise terms he wants in a renegotiated NAFTA, Trump has threatened to withdraw from it if negotiations fail. [130] On September 30, 2018, the deadline for negotiations between Canada and the United States, an interim agreement was reached between the two countries, thus retaining the trilateral pact when the Trump administration submits the agreement to Congress.

[150] The new name of the agreement was the United States-Mexico-Canada Agreement (USMCA) and came into force on July 1, 2020. [151] – Take advantage of U.S. farmers, ranchers and agricultural businesses by modernizing and strengthening food and agricultural trade in North America. Although President Donald Trump warned Canada on September 1 that he would exclude them from a new trade deal if Canada did not comply with its demands, it is not clear that the Trump administration has the power to do so without congressional approval. [145]:34-6[146][148][148] According to reports by the Congressional Research Service (CRS), one was published in 2017 and another on July 26, 2018, it is likely that President Trump would need congressional approval for fundamental changes to NAFTA before the changes are implemented. [145]:34-6[149] Many analysts explain these different results by pointing out the “two-speed” nature of the Mexican economy, where NAFTA has led foreign investment growth, high-tech production and wage growth in the industrial north, while the largely agricultural South has remained disconnected from this new economy. University of Pennsylvania economist Mauro Guillen argued that Mexico`s growing inequality is due to NAFTA workers receiving much higher wages from trade-related activities in the north. Through NAFTA, the three signatories agreed to remove barriers to trade between them.

By removing tariffs, NAFTA has increased investment opportunities. Before sending it to the U.S. Senate, Clinton added two subsidiary agreements, the North American Agreement on Labor Cooperation (NAALC) and the North American Agreement on Environmental Cooperation (NAAEC) to protect workers and the environment, as well as to allay the concerns of many members of the House of Representatives.

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