Unification of NAFTA
The North American Free Trade Agreement (NAFTA) is a trade agreement signed the USA, Canada and Mexico with the aim of integrating the economies of these countries. The economic agreement between these three countries makes NAFTA the largest free trade agreement and the biggest economic bloc on the globe. The GDP of the three countries is approximately $30 trillion. Through NAFTA, the signatories agree to remove all trade barriers between them. By eliminating trade barriers, tariffs, this agreement opens and widens the employment and trade opportunities.
Through NAFTA, the people of the three countries have been interacting freely. There is free movement of goods, services and people across the borders. The agreement is critical in fostering peaceful co-existence between the three countries. Further, it has enabled the three countries to develop their economies and increased the cross-border commerce. People are able to move from one country to another without restrictions or barriers.
Advantage of North American Free Trade Agreement (NAFTA)
The sole aim of the NAFTA agreement was to increase the cross-border commerce in the North America, Canada and Mexico. The agreement undoubtedly achieved this aim. By eliminating trade barriers and trade tariffs, the region show an increased trend of commercial and business activities in the region. The trade between the three regions shows an increased trade and investment from all the partners. From 1995 to 2015, the US’s GDP grew by 13%, Canada’s grew by 17%, while that of Mexico grew by 19%.
Secondly, NAFTA grants most favorable conditions to the three members. The three countries bestowed equal treatment and equality amongst themselves, including direct foreign investment from either country. The agreement required that the signatories to treat both the domestic and foreign investors equally. Federal contracts were also open to all the countries, this brought about mutual interaction and huge investment into the member states. Tariffs and taxes prior to the agreement made imports into respective countries very expensive, with lessened tariffs and taxes, imports were relatively cheap for the member states. Lastly, NAFTA agreement provided for disputes resolution mechanisms among the member states. Chapter 19 of the Agreement protects all business of the three countries from unfair trade practices. There is an
Disadvantages of NAFTA
The NAFTA agreement according to the member states has been foiled due the fact that US blames the agreement for the massive loss of job and employment opportunities for its citizens. Further, the agreement is blamed on the loss of state sovereignty of the member states as foreigners can own properties in the other countries. NAFTA is faulted for ignoring the existence of the native citizen rights especially on land ownership. According to the US, the pact has had devastating economic impacts on its citizens. The minimum wage for the US workers is higher than those of the other partners, and therefore, the pact has facilitated movement of cheap labor from Canada and Mexico into US.
In addition, NAFTA agreement has led to increased numbers of immigrants into the US. With increased numbers of immigration, there are increased rates of unemployment especially in the US. Further, the agreement has caused decreased costs of consumables, as a result of illegal trade and smuggling of goods into and from the member states. On the other hand, Mexico and Canada suffer from high competition from high quality goods and services from the US. This has adversely affected their domestic manufacturing industry, prices of domestic goods and loss of employment.