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North American Free Trade Agreement

North American Free Trade Agreement. Summary. Background Information Disadvantages of NAFTA Advantages of NAFTA Trouble in Juarez Conclusion. Background. Implementation of the North American Free Trade Agreement (NAFTA) began on January 1, 1994.

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North American Free Trade Agreement

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  1. North American Free Trade Agreement

  2. Summary • Background Information • Disadvantages of NAFTA • Advantages of NAFTA • Trouble in Juarez • Conclusion

  3. Background • Implementation of the North American Free Trade Agreement (NAFTA) began on January 1, 1994. • While some tariffs were eliminated immediately, others would take anywhere from 5-15 years to be eliminated.

  4. Background • This agreement removed most barriers for investment among the United States, Canada, and Mexico. • In addition, under NAFTA, all non-tariff barriers to agricultural trade between the United States and Mexico were eliminated.

  5. Background • The Implementation process of NAFTA’s no barriers was completed in 2008. • In 2008, the last of NAFTA’s transitional restrictions governing U.S., Mexico and Canada’s agricultural trade were removed: This concluded a 14-year project in which the member countries systematically dismantled numerous barriers to regional agricultural trade.

  6. Background • NAFTA created the world's largest free trade area, which now links 444 million people and producing $17 trillion worth of goods and services. • The North American Free Trade Agreement has two Supplements, the North American Agreement on Environmental Cooperation and the North American Agreement on Labor Cooperation

  7. Disadvantages • Some economists argue that NAFTA has been beneficial to business owners and elites in all three countries, but has had negative impacts on farmers in Mexico who saw food prices fall based on cheap imports from U.S. agribusiness and negative impacts on U.S. workers in manufacturing and assembly industries who lost jobs.

  8. Disadvantages • Other economists believe that NAFTA has not been sufficient (or worked fast enough) to produce economic convergence, nor to substantially reduce poverty rates. • In addition, some have suggested that in order to fully benefit from the agreement, Mexico must invest more in education and promote innovation in infrastructure and agriculture.

  9. Disadvantages • Since labor is cheaper in Mexico, many U.S. manufacturing industries moved part of their production from high-cost states to Mexico. • Between 1994 and 2002, the U.S. lost approximately 1.7 million jobs while gaining only 794,000 for a net loss of 879,000 jobs. • These industries included, but were not limited to Agri-businesses.

  10. Disadvantages • NAFTA expanded the maquiladora program, in which U.S.-owned companies employed Mexican workers near the border to cheaply assemble products for export to the U.S. • According to The Continental Social Alliance, these workers have; “no labor rights or health protections, workdays can stretch 12 hours or more, and if you are a woman, you could be forced to take a pregnancy test when applying for a job."

  11. Advantages • In 2007, Canada and Mexico were, respectively, the first and second largest export markets for U.S. agricultural products. • Exports to the two markets combined were greater than exports to the next six largest markets combined.

  12. Advantages • Agricultural trade increased in both directions(U.S.-Mexico) under NAFTA from $7.3 billion in 1994 to $20.1 billion in 2006. • This was an approximately 300% increase in economic activity: Or 25% year over year growth (12 years).

  13. Advantages • From 1992-2007, the value of U.S. agricultural exports worldwide climbed 65%. • Over that same period, U.S. farm and food exports to Mexico and Canada grew by 156%.

  14. Advantages • NAFTA expanded the maquiladora program, which enabled U.S.-owned companies to employ Mexican workers near the border. • This allowed for more efficient assembly of manufactured goods and in turn, increased exports to the U.S. • This increased Mexico’s labor force by 30%

  15. Perspective

  16. Juarez • According to Foreign Policy in Focus Juarez is “The Murder Capital of the World”. • Jaurez sits adjacent to El Paso, Texas. • NAFTA is believed to blamed by some for the violence.

  17. Conclusion • NAFTA is complicated and often intensely debated by many. • Although there have been some negative social consequences associated with NAFTA. Overall it has increased economic activity for all trading partners.

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