Analysis of the North American Free Trade Act

Analysis of the North American Free Trade Act (NAFTA)

The North American Free Trade Act (NAFTA) has been in place in the United States, Canada, and Mexico for more than three years, having been enacted with many loud and vocal concerns expressed by both the Congress and the media (When neighbours embrace..., 1997). NAFTA has been called, rightly so, the most comprehensive trade relationship ever negotiated among friendly countries. NAFTA also will go down in economic history as the first time a developing country has agreed to become a trading partner and opening up its economy to full competition with those countries (Hirsch, 1995).

This analysis will deal with three separate aspects of NAFTA. The first section will look at the history of NAFTA, providing a brief overview of the events leading up to the treaty, including some major tenets of that treaty. The second section will deal with the current state of relations between the trading partners. Section three presents the outlook for the future, looking at some of the challenges facing the NAFTA partners.

The NAFTA agreement came as the result of many years of confusing trade policies that followed World War II. Immediately after that war, the U.S. sent hundreds of billions of dollars in foreign aid and bank loans to Europe, Asia, Africa, Latin America, then threw open U.S. markets to let their products in. That attitude was not returned and an era of protectionism developed in our Asian a

ley, 1997, 76). Along with the additional revenues that seem to be occurring, many businesses that are actively utilizing the NAFTA policies and mandates complain of overwhelming administrative headaches associated with compliance. Companies across the board express irritation concerning the increased record-keeping (Gooley, 1997). The increased paperwork is a correlative effect of the NAFTA guidelines themselves. As Hirsch (1995) points out: to meet the broad-ranging objectives of the NAFTA objectives, a huge legal and administrative framework had to be put in place. What is not said in the agreement is that only the three parties to the agreement are intended to receive its benefits. Other countries are excluded; so to ensure that only Mexican, U.S. and Canadian goods are granted duty-free, permit-free, restriction-free movement within the free trade area, it was necessary to put in place the most elaborate system of trade controls ever known. It is only logical, of course, that the most wide-ranging trade agreement ever would also have the most elaborate set of trade rules ever invented (13). Political discontent. Many reports concerning NAFTA concur that the mood among many members of the 105th Congress are turnin

Category: Economics - A