NAFTA: Driving Factors and Linkages to Broader Economic Issues

Running Head: FREE TRADE AREA
NAFTA
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FREE TRADE AREA 2
Introduction
The adjustment of the purchasing power parity enables us to be conversant with both the
external and internal purchasing power which is generally known to be the quantity that an
average an income can buy on average inside a country when measured concerning a similar
value in the United States of America. The adjustments in the PPP are important since they tell
us the level of living standards in a given country and also provide a comparison of the living
standards with the other states. The exchange rate. The exchange rates then become useful in
telling about the ability of people to purchase goods and services in the modern global economy.
The United States and Canada have the largest ever bilateral trade in the world.
Thesis statement
NAFTA and TTP have seen the development of free trade among many nations and it
should therefore be developed.
Purpose
The purpose of this paper is to examine the driving factors that give an account of the
patterns to the linkages to the broader economic issues in the United States and the free trade
agreements. The paper will also touch on the causes of the negotiations that resulted in the FTA
and NAFTA.
The decision that meant to pursue a free trade agreement with Canada was the central
problem that troubled the GATT. The United States started seeking ways to have trade
agreements with Canada which was its most significant partner with the aim of increasing the
leverage on GATT with Europeans. The Canadian government also started thinking that
multilateralism was the only way of growing their commitment to the protectionist measures in

FREE TRADE AREA 3
the US in the years of 1970s. The Canadian economists also sought to secure a better position in
the US market thus the negotiation on the free trade was a priority to them. The United States to
expand the agenda of the GATT through the conclusion of GATT plus. The latter included issues
like services and ag4rocultural trade among others.
In the year 1983, the discussion concerning the bilateral accords showed little progress.
The Canadians later decided to seek broader bilateral agreements. The US was receptive to the
matter, and this led to the immediate commencement of negotiations that were finalized in the
year 1987.and took effect on January 1989. The most crucial aspect reached was the inclusion of
the financial services and the broad access to the general realm of the economy (Vinod , 2013)
although the negotiations were not easy, the Canadian government was able to secure an
exception for the cultural industries. However, in most areas, there was no controversy that
agriculture and some other several sectors were supposed to be linked to manufacturing g trade.
Canada, however, had the desire to create a binational panel with the US and its zeal to
hold out and let the negotiations fail and hence revealed that this was a tactical linkage that was
later utilized by the US but with some critical modifications despite the power equations that was
said to be asymmetrical (Gutu, 2016).
In the year 1993, the United States followed up an accord with Canada holding on the
NAFTA agreement. A decision that was made to commence negotiations with Mexico happened
in the year 1990. Talks were included to involve Canada in the year 1991, and the broader
context of Uruguay stalled round treaties proved to be crucial motivation to the US to agree to
the request laid by Mexico for FTA (Gutu, 2016). The negotiations were met by substantive
linkages and also pressures in the US. The large asymmetry in power was crucial in the United
States since they helped the country in reopening the negotiations.