In some cases, a product must meet both processing and content requirements. For example, pieces of hairdryer imported to Mexico from Japan and South Korea will arrive under parts classifications. When assembling with North American parts, the sum of the parts becomes a hairdryer. At this point, tariff transformation rules are being met, but percentage content requirements must now be met. Coopers and Lybrand, another leading consulting firm, interviewed executives from 410 of the fastest growing U.S. products and services companies. According to the published report, NAFTA has meant export opportunities for growing businesses, not job relocations. Opponents of NAFTA, who had predicted a mass exodus of U.S. jobs south of the border, proved to be false. NAFTA was a major contributor to the success of U.S. producers in Mexico in 1994. In the automotive industry, for example, the value of U.S.
car exports to Mexico declined by 6% between 1992 and 1993. With the implementation of NAFTA, car exports increased by 685% in 1994 to more than $437 million, according to the U.S. Department of Commerce. From January 1 to October 5, 1994, the Ford Motor Company exported 18,000 cars to Mexico. This represents a significant increase from the 1,700 cars and trucks that were exported there in 1993. U.S. textile and apparel exporters also performed well. The increase in U.S.
textile exports to Mexico between 1993 and 1994, the first full year of NAFTA, was 130% higher than between 1992 and 1993. The GATT was tasked with reducing the international customs average from 40% in 1947 to 5% in 1990. These reductions have led to a considerable expansion of international trade, a considerable increase in domestic revenues and a flourishing international competition, resulting in better quality and cheaper goods. The organization has been very successful in removing international trade barriers. However, many analysts have argued that it has not been very successful in eliminating less obvious forms of protection such as non-tariff barriers. New protectionist instruments, such as the abusive application of dumping legislation and environmental issues, labour and other issues, are becoming new non-tariff barriers. In order to limit the benefits of NAFTA to North America, rules of origin have been developed to define the origin of a given product. Only products originating in North America are granted free trade status, allowing them to enter the United States, Mexico or Canada duty-free or duty-free. Under these rules, with the expiry of tariffs, the incentive to use North American goods increases. NAFTA rules strengthen, clarify and simplify the rules of the U.S.-Canada free trade agreement.
Fast track laws require Congress to pass or reject trade agreements without making changes. Without them, foreign governments are reluctant to enter into agreements and concessions that could be amended at a later date. In the early 1990s, GATT`s inability to remove non-tariff barriers had put the organization at risk. Its inability to successfully resolve the disagreement between the United States and the European Community over agricultural subsidies and to conclude the Uruguay Round as planned had raised doubts about the organization`s ability to meet future challenges. In addition, the decline in world confidence in the GATT has contributed to the speed with which countries have formed trading blocs. Since the successful conclusion of the Uruguay Round agreements, confidence in his successor, the WTO, has increased considerably. Indeed, many believe that it will enforce international trade rules and resolve disputes between members better than their predecessors. (Although your supply chain partners – for example. B third-party logistics providers and service providers – may be more vulnerable to the effects of trade agreements