What is NAFTA (North America
Free Trade Agreement)?
North America free trade agreement is the agreement between three
countries which eliminates the tariff on trade and duties on trade. In NAFTA
there are three countries, USA, Canada, Mexico both signed the agreement to
remove the tariff and duties on trade. NAFTA increase the opportunities for
investment by eliminating the duties on trade. At The first time, NAFTA was signed
by only two developed countries with an of emerging marketing countries. NAFTA has created the free zone for trading
and it also helps to generate the high economic growth and rising the
prosperity of Canada, USA, and Mexico.
When NAFTA came into effect
and what was the purpose NAFTA?
On 1 January 1994 NAFTA came into effect for
creating the better living standard of the people of both three countries and
provide trade free region and largest trade region in the world as well as grow
the economic power of both countries who are involved in that agreement.
The main purpose of the NAFTA was to remove the barriers from
the trade of goods and services among three countries who are involved in the
agreement. There are some other purposes of
NAFTA which are describe following
Procedures for Resolution the trade disputes between countries.
and fair competition between them
barriers to trade and cross-border
movement of goods and services.
and enforcement of property right.
the most favored status to countries.
a framework for a regional and multilateral
corporation to increase the trade agreement’s benefits.
NAFTA helps Mexico to reduce high
tariff and promote the agriculture product export
to another country. NAFTA countries have
the power to access each other market and stimulate the economic growth of the
Who has benefited most from
NAFTA since its inception?
was most benefited from the NAFTA since its inception because with NAFTA agreement USA increase their economic
power in the whole world.the main resources for economic power were the GDP of the country. NAFTA has estimated that it boost the American GDP with 0.5%
per year it was approximately $50 billion in 2000. Apart from this, after 3
years in 2003, NAFTA was established, the US experienced most important economic growth-
38% compared to 30% in Canada and 31% in Mexico. The U.S. had to consume huge
natural resources. Canada and Mexico are the best exporters of the resources
and USA imports the goods from both countries.
Has Canada benefited from
is the largest trading partner of Canada.
Canad and USA trade worth was $752 billion and this relation also Boost the Canadian
economy power. Since with NAFTA, trade
barriers are removed and USA and Mexico relationship also help Canada to improve the economic power of Canada.
There are 5 key ways
Canadian have to benefit from the NAFTA.
v More selection of goods which is an import from another
v Employment opportunities for the public.
v Movement of professional and investors across the
v Expand the trade volume.
v Increase foreign investment in Canada( direct
investment from the USA increased by 243%
between 19930to 2013).
Will the recent political changes in the USA affect the future of NAFTA?
Recent political changes in the USA will change the effect of NAFTA. The president of USA, Mr. Donald Trump has a legal authority to withdraw the USA from
NAFTA. This decision affects the NAFTA as
well as the USA because USA takes more beneficial advantages from NAFTA.
From this decision, both countries like
Canada and Mexico also affects because
their new way of trade is affected by the political changes in the USA.
It is assumed that Trump administration has the latitude
to pull the USA from NAFTA with or
without the Congressional Support. Not exactly under article 2205 of
NAFTA, United States could withdraw from the agreement on six month’s notice
and Canada and Mexico would remain in force with NAFTA.