Global Business Principles

Assignment #1

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NAFTA

The North American Free Trade (NAFTA), was implemented to promote trade and to eliminate
trade barriers between the United States, Canada and Mexico.

USMCA

The United States-Mexico-Canada Agreement (USMCA), is a trade deal between three nations
signed on September 30 2018. Much of the USMCA updates the 25-year-old NAFTA, with new
laws, intellectual property protection, the internet investment, state-owned enterprise and
currency.

When NAFTA did came into effect.

The NAFTA, signed by Canadian prime minister Brain Mulroney, Mexican president Carlos
Salinas and U.S. president George H.W Bush came into effect on January 1 1994.

When USMCA did came into effect.

The USMCA, signed by U.S. President Donald Trump, Canadian Prime Minister Justin Trudeau
and Mexican President Enrique Peña Nieto signed on September 30, 2018, and came into effect
on July 1 2020.

Purpose of NAFTA

Simplify the cross-border movement of goods and services between the territories by terminating
the obstacles to trade.

Supply sufficient and functional safety and enforcement of intellectual property rights in each
territory.

Reduce trading costs and increase in business investment and imports.

To boost the three countries' economy and job opportunities and to resolve disputes among the
three countries.
Purpose of USMCA

To reduce the tariffs to zero in the automobile industry and to prohibit duties on the digital
economy.

Get more access to Canadian dairy products by the United States.

To provide unique educational, professional, and consultive services.

Who has benefited the most from NAFTA since its inception?

Vermont, North Dakota, South Dakota, Delaware, and Missouri are the five states of the United
States that benefited the most from NAFTA.

Agriculture, digital product and services, manufacturing, energy, small business are the sectors
that make the most use of NAFTA.

Difference between NAFT and USMCA

 USMCA need 75% of the vehicle parts created in one of the three countries, and NAFT
requires 60% of RAV production within these three countries
 USMCA made transparency in the employment contracts while NAFTA blamed long for
sending jobs to Mexico, where wages are lower
 Dairy farmers get more market access, NAFTA eliminated most of the trading tariff, and
USMCA made it to zero
 Revision mechanism for USMCA and NAFTA are every six-year for USMCA and at the
moment of controversy
 Intellectual property right for NAFTA and USMCA is eight years and ten years
 Dispute settlement mechanism is by bilateral meetings in USMCA and Trilateral Panels
in NAFTA
 The markets in USMCA and NAFTA mark exchange rates don't have any particular
exchange rate
Will the recent American political changes affect the NAFTA/USMCA future?

NAFTA/USMCA changed the North American economy by expanding efficiency and financial
movement in the area. As per numerous specialists, the U.S. also accomplices, both as far as
yield and business. Ending the 25-year-old agreement could be a severe mistake in the
competitive world, putting the U.S. off guard. Therefore, there will be more understanding
between the countries that may happen in the future for more productivity and development for
the North American countries

Has Canada benefited from NAFTA/USMCA? If yes, how? If no, then why not?

NAFTA is the best model for the whole world that showcase the benefits of trade liberalization
with firm rules and regulations governing trade and investment. Thus it demonstrates how it
benefited Canada's economy. Now, the new USMCA strengthened the USA and Mexico's
economic ties with Canada.

Below are the five key ways Canadians have benefited from NAFTA/USMCA:

1. A broader selection of goods

2. Increased trade volume
3. Foreign direct investment increased.
4. Free movement of professionals and investors across the border
5. The development of new jobs
References
Kenton, Will. (2020, June 30). Economics, Macroeconomics. Retrieved from Investopedia:
https://www.investopedia.com/terms/n/nafta.asp#:~:text=What%20Is%20the%20North
%20American,effect%20on%20January%201%2C%201994.

Blenman, J. (2017, September 15). https://www.sunlife.ca/en/tools-and-resources/money-and-

finances/managing-your-money/nafta-what-it-is-how-it-benefits-canada-part-1/.

Government Of Canada. (2020, September 2). A new Canada-United States-Mexico Agreement.

Retrieved from international.gc: https://www.international.gc.ca/trade-commerce/trade-
agreements-accords-commerciaux/agr-acc/cusma-aceum/index.aspx?lang=eng

Government Of Canada. (2020, January 21). North American free-trade agreement (NAFTA) -
Resources. Retrieved from international.gc: https://www.international.gc.ca/trade-
commerce/consultations/nafta-alena/toolkit-outils.aspx?lang=eng