Nafta Regional Trade Agreement


The overall effect of the agricultural agreement between Mexico and the United States is controversial. Mexico has not invested in the infrastructure needed for competition, such as efficient railways and highways. This has led to more difficult living conditions for the country`s poor. Mexico`s agricultural exports increased by 9.4% per year between 1994 and 2001, while imports increased by only 6.9% per year over the same period. [69] It is impossible to isolate the effects of NAFTA on the broader economy. For example, it is difficult to say with certainty what percentage of the current U.S. trade deficit, which reached a record $65,677 million at the end of 2005, is directly attributable to NAFTA. It is also difficult to say what percentage of the 3.3 million manufacturing jobs that were lost in the United States between 1998 and 2004 is the result of NAFTA and what percentage would have been created without this trade agreement. It cannot even be said with certainty that the intensification of trade between NAFTA countries is exclusively the result of the trade agreement.

Those who support the agreement generally claim NAFTA loans for enhanced trade activity and reject the idea that the agreement has resulted in job losses or a growing trade deficit with Canada and Mexico ($8,039 million and $4,263 million respectively in December 2005). Critics of the agreement generally associate it with these deficits and job losses. In fact, NAFTA has helped the U.S. auto sector compete with China, Hanson says. By contributing to the development of cross-border supply chains, NAFTA has reduced costs, increased productivity and improved U.S. competitiveness. That meant losing a few jobs in the United States, since jobs were relocated to Mexico, he said, but without the pact, we could have lost even more. “Because Mexico is so close, you can have a regional industrial cluster where goods can come and go. Manufacturing in all three countries can be very integrated,” says Hanson. These links, which have given U.S. automakers an advantage over China, would be much more difficult to achieve without NAFTA tariff reductions and intellectual property protection.

The North American Free Trade Agreement (NAFTA) was a three-country agreement negotiated by the governments of Canada, Mexico and the United States, which came into force in January 1994. NAFTA eliminated most tariffs on goods traded between the three countries, with a focus on trade liberalization in agriculture, textiles and automobiles.

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