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Brief Report on North American Free Trade Agreement The North American Free Trade Agreement (NAFTA) is an agreement

signed by the governments of Canada, Mexico, and the United States, creating a trilateral trade bloc in North America. The agreement came into force on January 1, 1994. It superseded the Canada – United States Free Trade Agreement between the U.S. and Canada. NAFTA has two supplements: the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC).

Negotiation and U.S. ratification
Following diplomatic negotiations dating back to 1986 among the three nations, the leaders met in San Antonio, Texas, on December 17, 1992, to sign NAFTA. U.S. President George H. W. Bush, Canadian Prime Minister Brian Mulroney and Mexican President Carlos Salinas, each responsible for spearheading and promoting the agreement, ceremonially signed it. The agreement then needed to be ratified by each nation's legislative or parliamentary branch. Before the negotiations were finalized, Bill Clinton came into office in the U.S. and Kim Campbell in Canada, and before the agreement became law, Jean Chrétien had taken office in Canada. The proposed Canada-U.S.trade agreement had been very controversial and divisive in Canada, and the 1988 Canadian election was fought almost exclusively on that issue. In that election, more Canadians voted for anti-free trade parties (the Liberals and the New Democrats) but the split caused more seats in parliament to be won by the pro-free trade Progressive Conservatives (PCs). Mulroney and the PCs had a parliamentary majority and were easily able to pass the Canada-US FTA and NAFTA bills. However, he was replaced as Conservative leader and prime minister by Kim Campbell. Campbell led the PC party into the 1993 election where they were decimated by the Liberal Party under Jean Chrétien, who had campaigned on a promise to renegotiate or abrogate NAFTA; however, Chrétien subsequently negotiated two supplemental agreements with the new US president. In the US, Bush, who had worked to "fast track" the signing prior to the end of his term, ran out of time and had to pass the required ratification and

In the area of intellectual property. The agreement's supporters included 132 Republicans and 102 Democrats. Senate supporters were 34 Republicans and 27 Democrats. Within 10 years of the implementation of the agreement. If I didn't believe that.signing into law to incoming president Bill Clinton. Canada and Mexico. 1994 brought the immediate elimination of tariffs on more than one-half of Mexico's exports to the U. NAFTA passed the Senate 61-38. 1993.-Canada trade was already duty free. NAFTA also seeks to eliminate non-tariff trade barriers and to protect the intellectual property right of the products. it went into effect on January 1. It also required US partners to adhere to environmental practices and regulations similar to its own. and more than onethird of U. The implementation of NAFTA on January 1. 1993.S.[6] . 1994." Provisions The goal of NAFTA was to eliminate barriers to trade and investment between the US. agricultural exports to Mexico that were to be phased out within 15 years. With much consideration and emotional discussion. 234-200. the North American Free Trade Agreement Implementation Act made some changes to the Copyright law of the United States. Prior to sending it to the United States Senate. Clinton signed it into law on December 8. and good-paying American jobs. Most U.S.[3][4] Clinton while signing the NAFTA bill stated that "NAFTA means jobs. foreshadowing the Uruguay Round Agreements Act of 1994 by restoring copyright (within NAFTA) on certain motion pictures which had entered the public domain. American jobs. exports to Mexico.S.S. Clinton introduced clauses to protect American workers and allay the concerns of many House members. I wouldn't support this agreement. the House of Representatives approved NAFTA on November 17. all USMexico tariffs would be eliminated except for some U.

2 billion for Canada and $163. and meats to be tariff-free. whose findings have been reported in publications such as the World Bank's Lessons from NAFTA for Latin America and the Caribbean. but has had negative impacts on farmers in Mexico who saw food prices fall based on cheap imports from US agribusiness. and negative impacts on US workers in manufacturing and assembly industries who lost jobs.[12] nor to substantially reduce poverty rates. the countries involved have been able to do the following: Exports At $248. Since the implementation of NAFTA.[7] NAFTA's effects. have been quantified by several economists.Mechanisms Chapter 52 provides a procedure for the interstate resolution of disputes over the application and interpretation of NAFTA. . corn. and Mexico. which has seen its poverty rates fall and real income rise (in the form of lower prices. It was modeled after Chapter 69of the Canada-United States Free Trade Agreement. Mexico must invest more in education and promote innovation in infrastructure and agriculture. USA. ending tariffs on various goods and services. NAFTA has allowed agricultural goods such as eggs. and implementing equality between Canada. they were the top two purchasers of US exports in 2010.[9] and NAFTA Revisited by the Institute for International Economics. especially food). This allowed corporations to trade freely and import and export various goods on a North American scale. Trade The agreement opened the door for open trade. Critics also argue that NAFTA has contributed to the rising levels of inequality in both the US and Mexico. even after accounting for the 1994–95 economic crisis. both positive and negative. Some have suggested that in order to fully benefit from the agreement.3 billion for Mexico.[11] Others[who?] argue that NAFTA has been beneficial to business owners and elites in all three countries.[10] Some[who?] argue that NAFTA has been positive for Mexico.[8] NAFTA's Impact on North America. Some economists believe that NAFTA has not been enough (or worked fast enough) to produce an economic convergence.

machinery ($51. The top export categories (2-digit HS) in 2010 were machinery ($63. Leading categories include fresh vegetables ($4.2 billion).S. Leading categories included red meats.6% ($103 billion). electrical machinery ($56.US goods exports to NAFTA in 2010 were $411.5 billion. US imports of agricultural products from NAFTA countries totaled $29.6 billion) from 2008.4 billion). to NAFTA were $63.8 billion).8 billion). from 2009. US exports of private commercial services. and red meats.0 billion).2% of overall US exports in 2010. mineral fuel and oil ($26.5% of overall U.3 billion).3 billion). imports in 2010.4% ($78 billion) from 2009 and 149% from 1994 (the year prior to Uruguay Round) and up 190% from 1993 (the year prior to NAFTA).8 billion in 2010.2 billion). up 25. vehicles ($86.7 billion). and precious stones (gold) ($13.6 billion). live animals ($2. fresh foods (excluding nuts) ($1.6 billion). fresh/chilled/frozen ($2. up 184% from 1994.4 billion for Canada and $229. and fresh vegetables ($1.8 billion in 2009 (the latest data available).7 billion).9 billion). US exports of agricultural products to NAFTA countries totaled $31. US exports to NAFTA accounted for 32.0 billion).2 billion). vehicles (parts) ($56.7 billion). up 23. US imports from NAFTA accounted for 26. they were the second and third largest suppliers of goods imports to the United States in 2010. fresh/chilled/frozen ($2. excluding military and government. fresh fruit (excluding bananas) ($2.2 billion).7 billion). US goods imports from NAFTA totaled $506. Imports At $276. snack foods including chocolate ($4. . down 7% ($4.1 billion in 2010. and up 235% from 1993. but up 125% since 1994.4 billion in 2010.7 billion for Mexico. electrical machinery ($61. and plastic ($22. The five largest categories in 2010 were mineral fuel and oil (crude oil) ($116. coarse grains ($2.0 billion).

[3][4][5] Industry Maquiladoras (Mexican factories that take in imported raw materials and produce goods for export) have become the landmark of trade in Mexico.5% since the implementation of NAFTA in 1994. down 11.4% increase ($25 billion) over 2009. Trade balances The US goods trade deficit with NAFTA was $94.8% of the overall U. The US goods trade deficit with NAFTA accounted for 26. The US direct investment in NAFTA countries is in nonbank holding companies.6 billion in 2010. Investment The US foreign direct investment (FDI) in NAFTA Countries (stock) was $357. These are plants that moved to this region from the United States. Hufbauer's (2005) book shows that income in the maquiladora sector has increased 15. up 16. This has allowed for the rapid growth of non-border .7 billion in 2009 (latest data available).3 billion with NAFTA countries in 2009 (the latest data available). a 36.5% from 2008.2 billion in 2009 (the latest data available). and in the manufacturing. Other sectors now benefit from the free trade agreement. The foreign direct investment.US imports of private commercial services excluding military and government were $35.5 billion) from 2008 but up 100% since 1994.S.2% ($4. goods trade deficit in 2010. and the share of exports from non-border states has increased in the last five years while the share of exports from maquiladora-border states has decreased.5 billion in 2009 (latest data available). hence the debate over the loss of American jobs. of Canada and Mexico in the United States (stock) was $237. up 8. finance/insurance. The US had a services trade surplus of $28.8% from 2008. and mining sectors.

[citation needed] NAFTA did not inherently present a systemic threat to the North American environment. Ciudad Juárez. would have negative environmental impacts. such as the concern that NAFTA would create a "race to the bottom" in environmental regulation among the three countries. or mechanisms.[citation needed] In some cases. NAFTA-related environmental threats instead occurred in specific areas where government environmental policy. such as Chapter 11. The Clinton administration negotiated a side agreement on the environment with Canada and Mexico. Securing U. Environment For more details on this topic. infrastructure. were unprepared for the increasing scale of production under trade liberalization.[13] In response to this mandate.[14] The CEC has held four symposia using this framework to evaluate the environmental impacts of NAFTA and has commissioned 47 papers on this subject. congressional approval for NAFTA would have been impossible without addressing public concerns about NAFTA’s environmental impact. the CEC commissioned these papers from leading independent experts. the North American Agreement on Environmental Cooperation (NAAEC). environmental policy was neglected in the wake of trade liberalization.S. or the hope that NAFTA would pressure governments to increase their environmental protection mechanisms. and Reynosa. the CEC was given a mandate to conduct ongoing ex post environmental assessment of NAFTA.metropolitan areas. none of the initial hypotheses were confirmed. apart from potentially the ISDS provisions of Ch 11. see NAFTA's Impact on the Environment. the CEC created a framework for conducting environmental analysis of NAFTA. NAFTA's measures for investment protection. To alleviate concerns that NAFTA. In keeping with the CEC’s overall strategy of transparency and public involvement. . the first regional trade agreement between a developing country and two developed countries.[15] Overall. one of the first ex post frameworks for the environmental assessment of trade liberalization. which led to the creation of the Commission for Environmental Cooperation (CEC) in 1994. as was originally feared. León and Puebla. such as Toluca. all three larger in population than Tijuana. The framework was designed to produce a focused and systematic body of evidence with respect to the initial hypotheses about NAFTA and the environment. in other cases.

S. leading to an increase in sales and profits for the U.[17] Agriculture From the earliest negotiation. threatened to discourage more vigorous environmental policy. but not in Canada. Mexico did not invest in the infrastructure necessary for competition.[18] One of the most affected agricultural sectors is the meat industry. As a result.4 percent annually between 1994 and 2001. implying that Mexicans can now afford to buy more meat and thus per capita meat consumption has grown. and imports have become necessary. agricultural products in 2004. Mexico's agricultural exports increased 9.S. which resulted in more difficult living conditions for the country's poor. However.9 percent a year during the same period. agricultural agreement is a matter of dispute. the Mexican petroleum sector.S.and measures against non-tariff trade barriers. and poultry products).S. instead. such as efficient railroads and highways. three separate agreements were signed between each pair of parties. export market to the 2nd largest importer of U. agriculture was (and still remains) a controversial topic within NAFTA.S. internal corn demand has increased beyond Mexico's sufficiency. The Canada–U. agreement contains significant restrictions and tariff quotas on agricultural products (mainly sugar. The allowance of free trade removed the hurdles that impeded business between the two countries. while imports increased by only 6. whereas the Mexico–U. and the transportation equipment sector in the United States and Mexico.S.[19] Production of corn in Mexico has increased since NAFTA's implementation. Agriculture is the only section that was not negotiated trilaterally. dairy. This coincides with a noticeable increase in Mexican per capita GDP that has created large changes in meat consumption patterns. .. and NAFTA may be credited as a major catalyst for this change. Mexico has gone from a smallkey player in the pre-1994 U. meat industry. Mexican farmers have provided a growing meat market for the U.S. as it has been with almost all free trade agreements that have been signed within the WTO framework.[16] The most serious overall increases in pollution due to NAFTA were found in the base metals sector. pact allows for a wider liberalization within a framework of phase-out periods (it was the first North–South FTA on agriculture to be signed). The overall effect of the Mexico–U.

or extend TN status granted earlier). many of the same rural people who would have been likely to produce highermargin value-added products in Mexico have instead emigrated. The rise in corn prices due to increased ethanol demand may improve the situation of corn farmers in Mexico. yet through a program of subsidies expanded by former president Vicente Fox. the number of non-immigrants in TN status present in the U.e. was due to very high trade barriers before NAFTA or other regional trade agreements.[20] Zahniser & Coyle have also pointed out that corn prices in Mexico.S.[22] Mobility of persons According to the Department of Homeland Security Yearbook of Immigration Statistics. (A discrepancy may be caused by some TN entrants leaving the country or changing status before their three-year admission period has expired. 17. have drastically decreased. during fiscal year 2006 (i. at the end of the fiscal year is approximately equal to the number of admissions during the year. and the TN1 admission is valid for three years.321 of their family members (13.. Unfortunately.S.far beyond the quotas Mexico had originally negotiated.136 Canadians. while other immigrants admitted earlier may change their status to TN or TD.S.633 Canadians and 9. as well as a number of third-country nationals married to Canadians and Mexicans) entered the U.880 foreign professionals (64. in the treaty national's dependent (TD) status.904 Mexicans. adjusted for international prices. The study focused on the effects that gradual "phase-in" periods in regional trade agreements. Most of the increase in members’ agricultural trade.[citation needed] In a study published in the August 2008 issue of the American Journal of Agricultural Economics. agricultural exports to Mexico and Canada even though most of this increase occurred a decade after its ratification..247 Mexicans) were admitted into the United States for temporary employment under NAFTA (i. . 73. have on trade flows. which was only recently brought under the purview of the World Trade Organization. including NAFTA. Additionally.e. 2. [23] Because DHS counts the number of the new I-94 arrival records filled at the border.[21] The logical result of a lower commodity price is that more use of it is made downstream. production has remained stable since 2000. October 2005 through September 2006). NAFTA has increased U. in the TN status).

[26] This applies to the water from Canada's lakes and rivers.219 Mexican citizens were present in Canada as "foreign workers".S. a company out of Santa Barbara. 2006. as of December 1.S. a total of 24. a move that destroyed the Sun Belt business venture.[28] the Canadian federal government repealed the ban and settled with the American company for US$13 million. The American company argued that their additive had not been conclusively linked to any health dangers. Following a finding that the ban was a violation of the AIT.S. and that the prohibition was damaging to their company.. Other Canadian researchers and the U.[25] Criticism and controversies There is much concern in Canada over the provision that if something is sold even once as a commodity. citizens) and 13. citizens and 15. In 1996.[30] . the government cannot stop its sale in the future. and cite studies that include possible nerve damage. These numbers include both entrants under the NAFTA agreement and those who have entered under other provisions of the Canadian immigration law. In 1999. filed an Arbitration Claim under Chapter 11 of the NAFTA claiming $105 million as a result of Canada's prohibition on the export of bulk water by marine tanker. Sun Belt Water Inc. At the time. fueling fears over the possible destruction of Canadian ecosystems and water supply. The American company brought a claim under NAFTA Chapter 11 seeking US$201 million. Other fears come from the effects NAFTA has had on Canadian lawmaking.[24] New entries of foreign workers in 2006 were 16.830 U.[27] from the Canadian government and the Canadian provinces under the Agreement on Internal Trade ("AIT"). California. the Canadian federal government banned the importation of the additive.841 (U. The claim sent shock waves through Canadian governments that scrambled to update water legislation and remains unresolved. the gasoline additive MMT was brought into Canada by an American company. Environmental Protection Agency disagree with Health Canada.[29] Studies by Health and Welfare Canada (now Health Canada) on the health effects of MMT in fuel found no significant health effects associated with exposure to these exhaust emissions.933 (Mexicans).Canadian authorities estimated that.

disappointed with the [NAFTA panel's] decision." (Nick Lifton. 2006. spokesman for U.[31] The settlement has not yet been ratified by either country. Canada had filed numerous motions to have the duty eliminated and the collected duties returned to Canada.[32] After the United States lost an appeal from a NAFTA panel. but it will have no impact on the anti-dumping and countervailing duty orders.[34][35] . the United States Court of International Trade found that imposition of the duties was contrary to U. Trade Representative Rob Portman)[33] On July 21. law. Oregon.S. Grant County. in part due to domestic opposition in Canada. it responded by saying "We are.Ponderosa Pine logs taken from Malheur National Forest. of course. 2006.S. The United States and Canada had been arguing for years over the United States' decision to impose a 27 percent duty on Canadian softwood lumber imports. until new Canadian Prime Minister Stephen Harper compromised with the United States and reached a settlement on July 1.