An In-depth Report on the North American Free Trade Agreement (NAFTA)

This report examines the North American Free Trade Agreement (NAFTA), delving into its historical context, objectives, and the roles of the United States, Canada, and Mexico. The report discusses the benefits of the agreement, such as the creation of a tariff-free zone, which facilitates trade between the three countries. It also explores the drawbacks, including the impact on jobs and the environment, particularly in the manufacturing sector. The report further analyzes the current renegotiations of NAFTA, highlighting the key issues, such as tariffs and market access, and the goals of each country. The report concludes by emphasizing the economic interdependence of the three nations and the potential consequences of any restrictions on trade. The report also discusses the challenges of the agreement and how it affects the countries involved.

NAFTA Negotiations Key points:
 The North American Free Trade Agreement or NAFTA is being constructed carefully
for over twenty three years, in order to create a satisfactory balance of protectionism
and liberalization.
 The NAFTA negotiations are being split into two different tracks. One is focused into
improving and modernizing areas of common interest and the other one is
characterized by the differences which threaten the negotiations.
 The modernization track helps in streamlining the custom clearances, regulatory
alignment, facilitating trades for small as well as medium sized enterprises and digital
modernization.
 Broader facilitation, regulatory alignment and ecommerce not only helps in reducing
costs of transaction across the world, but also makes it easier for the smaller traders to
compete more effectively and efficiently in the huge market.
 However, NAFTA received several criticisms as it took away US jobs. The agreement
did many good things which enhanced the economy of the North America, but at the
same time, it also has many issues related to the agreement.
 These weaknesses of the agreement have severe impact on the Mexican and American
workers as well as the environment.
 Mexican labors are cheaper due to which majority of the manufacturing industries or
units withdrew their production part from the higher cost United States.
 The US trade business lowered and maximum jobs went to Mexico. Around eighty
percent losses were in the manufacturing units and the states which got affected were
New York, California, Texas and Michigan.
 This issue also suppressed the wages of US workers.

 It was not that all the companies were moving to Mexico, some used this threat as
union leverage at organization of drives. When the workers were given to choose
between losing factory and joining union, they chose the plants.
 However, in response to the competitive pressure of NAFTA, Mexico started using
more chemicals and fertilizers, which became expensive for the country’s economy. It
also resulted in the deterioration of Mexico’s environment.
 This whole situation also caused exploitation of the workers and Mexico’s farmers
were running out of business.
 Presently, all three countries, that is, US, Mexico and Canada are renegotiating
NAFTA and they have determined goals.
 The trade representatives of Mexico, United States and Canada are successfully
working on this particular task, in order to redefine the whole economic relationship.
 This will result in reshaping the entire economy of United States, which was
increasingly depending on their trades with Canada and Mexico since the NAFTA
plan backfired.
 The whole process is time consuming and not that easy.
 There is also a chance of one party leaving and the whole agreement falls apart.
 Canada’s main aim is stopping United States from imposing the tariffs on their goods
and products, which they have been trading for decades, freely.
 Canada has been the largest market of export for the American manufactured goods.
United States does not want to lose their assistance in exporting goods to their
northern neighbor.
 The administration is taking care that US is importing less and exporting more. On the
other hand, Mexico’s goal is to ensure that United States doesn’t slap tariffs on their
products.

 The main point of NAFTA was creating a tariff free zone for the businesses so that
the three countries would export and import their products easily without any extra
costs.
 All three countries’ economies are completely interdependent with each other, thus,
any restrictions imposed on the import processes can cause serious damage and
problems to the manufacturers of the United States and also, their businesses are
totally dependent on those two countries’ markets.