North American Free Trade Agreement

Abstract

The North American Free Trade Agreement, also known as NAFTA, went into force on January 1, in the year 1994. The free trade agreement was signed between the governments of Canada, Mexico and the United States, in order to create the biggest free trade market in the world. The agreement is a very complex one, which has set its own rules and regulations between the three trading countries. The complete document of the agreement is comprised of eight sections, around 2,000 pages and 22 chapters in all. At the time of its beginning, the agreement was said to create more ways for an international trade agreement, but with the passage of time, the accord had some positive impacts on the economy of Mexico and some negative effects on the United States economy.

North American Free Trade Agreement

Introduction

The much debated and controversial, North American Free Trade Agreement (NAFTA) was signed on December 17, 1992, between Canada, Mexico and the United States. It was one of a first ever free trade accord between an industrialized and developing countries. From the NAFTA, the world was expecting that it would create a huge and complete market between the three business partners in the region.

At the time of its origin, the agreement was expected to be an improved and broad version of the free trade agreement between Canada and the U.S. The NAFTA had key assurances regarding liberalization of trade and investment. It called on to establish free business in agricultural products between the U.S. and Mexico within 15 years. It also pledged to transform many agricultural limitations between the U.S. and Mexico, into tariff-rate quotas and agreed on a period of 15 year for the phase-out of the over-quotas tariffs. With the signing of the NAFTA, several performance necessities on investment in the region were also removed. This opened fresh business occasions for different sectors of Mexico, for instance finance services. It was also being said that the NAFTA would be an example for different trades in the future with the opening of financial services market in Mexico to the U.S. and Canadian participants by the year 2000 (Hufbauer & Schott, 1993).

Enforcement of NAFTA in 1994

The North American Free Agreement between Canada, Mexico and the U.S. finally went into implementation on January 1, 1994. After the enforcement, the outstanding limitations and duties were removed as programmed on January 1, 2008. With an estimated current links of 450 million people producing goods and services of worth $17 trillion, the NAFTA is world's largest area for free trade. Since the enforcement of the accord, trade between the U.S. and other participants of the NAFTA has mounted. By the year 2009, the trade of the U.S. services and good with NAFTA partners was about $1.6 trillion, while the exports stood at about $397 billion and imports at $438 billion. In all the U.S. goods and services business with the NAFTA was $41 billion in ...