Question

What is the history of the NAFTA treaty? What is the objectives of this free trade treaty? What are the benefits? What are the negatives? What  are the changes made to the new USMCA treaty? Overall, is USMCA a positive or negative on the economy, jobs, and cultures.

Answer 1

NAFTA stands for North American Free Trade Agreement. It is an agreement which was signed on January 1, 1994 among US, Canada and Mexico to keep the trading costs low and provide a boost to the North American market. It replaced the 1988 agreement between Canada and US Free trade agreement. Initiated by the US president George H.W. Bush, it came into effect under President Clinton in 1994. Some of its features were eliminating most of the tariffs imposed on exports and exports thus in turn reducing the trade barriers in place.

On a broad level some of the objectives are:

1. Facilitate cross-border movement of, goods and services.
2. Promoting fair competition.
3. Intellectual property rights protection and enforcement.
4. A framework for further trilateral cooperation reap on the benefits of this agreement.

There also have been additions to NAFTA primarily : the North American Agreement on Labor Cooperation and the North American Agreement on Environmental Cooperation.

NAFTA led to an estimated 3.5 times the trade between the three countries listed above. Economic growth and higher wages are also attributed to NAFTA.

However on the downside, it may have put some Mexico farmers out of business due to subsidized farm from North America reaching Mexico.It also probably impacted Mexican economy in other ways such as environmental deterioration and substandard conditions for workers..

Now with Trump in power he is looking forward to abolish the treaty since he doesnt consider it beneficial for US. He has signed up for a new trilateral treaty at the G20 summit in Buenos Aires which is named United States-Mexico-Canada Agreement.( USMCA). Well abolish would not be the right word probably since it could be termed as a newer version of the NAFTA.

Talking about the goal is to increase auto parts manufacturing in North America. one of the other changes from NAFTA has been companies can no longer sue governments over perceived mistreatment.

The downside could be on the dairy industry which would have to limit the exports.Steel and alumium workers are also not happy with the current steep tarrifs.