NAFTA Treaty: Assessing Economic Outcomes and Financial Integration

This essay examines the implementation of the North American Free Trade Agreement (NAFTA) in 1993 by Bill Clinton, focusing on its aim to establish a free trade bloc between the USA, Mexico, and Canada. The treaty sought to eliminate taxes and tariffs to promote free trade, which faced opposition but ultimately led to economic prosperity in the region. The essay notes that while financial market integration was generally smooth, the equity market's performance lagged behind the goods and services trade. Despite initial underperformance in the capital markets, integration improved over time, although expectations for capital market agility were not fully met. The analysis concludes by highlighting that domestic market conditions remained largely unchanged even after NAFTA's implementation.

1
In the year 1993, Bill Clinton tried to implement the North American Free Trade Agreement
(NAFTA). The objective of this free trade agreement was to have a trading bloc comprising
of North American nations such as The USA, Mexico, and Canada. The trade bloc aimed to
remove all the taxes and tariffs so that trade between the countries become free. The president
faced a lot of protest from the congressmen and the labor unions of the country. Despite that,
the treaty was implemented that led to the economic prosperity of the country and the North
American region as a whole.
NAFTA is a trade treaty that regulates the free exchange of all the products and the services
that are exchanged between the participating nations. The implementation of the treaty
immediately showed signs of prosperity in the region as the economic growth increased due
to the improvement in the trade infrastructure in the region. The financial market integration
was smoother compared to the goods and the service trade among the three participating
nations. The study has shown that only the equity market of the region had experienced a
slight problem like the goods and the service trade among the nations. It failed to match the
pace at which the goods and the service market flourished.
However, with time, there has been an increased integration among the capital markets in the
three countries. Therefore, the situation has improved after the implementation of NAFTA
when compared to the situation before the implementation of it. Nevertheless, below the par
performance of the equity market and the capital market has not matched with the expectation
of the people who thought the capital market to be as agile as the goods and the service
market. The different capital markets have failed to show any improvement after the
imposition of the NAFTA treaty. The domestic conditions in these markets have remained
even after the imposition of the free-trade bloc.