NAFTA Historical Beginning Term Paper

Pages: 89 (24582 words)  ·  Bibliography Sources: ≈ 34  ·  File: .docx  ·  Level: College Senior  ·  Topic: Economics


3. A panel of experts was utilized to handle disputes.

The creation of CUSTA sparked interest from Mexico. The free trading area or FTA spanned greater than 360 million people, and $6 trillion in annual output. NAFTA may also be considered a link to two of the largest trading partners to the U.S.: namely Mexico and Canada.

History Bibliography:

Mariama W. Williams, A Brief History of GATT and NAFTA; Women's Alternative Economic Network

Gary C. Hufbauer, Reginald Jones Senior Fellow and Diana Orejas, NAFTA AND THE ENVIRONMENT: LESSONS FOR TRADE POLICY, Institute for International Economics (2001)

Daryll E. Ray, Director, Agricultural Policy Analysis Center Melissa B. Cooney, NAFTA and the Small Mexican Farmer, Graduate Research Assistant University of Tennessee

US-Mexico Chamber of Commerce.

NAFTA Objectives

NAFTA was created with many objectives and goals in mind. Primarily, through national treatment measures and a "most-favored-nation" agreement, the goals and objectives of NAFTA included the following:

Facilitation of cross-border movement of goods and services between countries, and the elimination of barriers to trade in foreign parties.

Promotion of free and fair competition among territories

Advancement of investment opportunities among parties

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Provide for the protection of and enforcement of intellectual property rights within the territories of each unique party

Creation of procedures that would enable implementation of the Agreement, as well as provisions for the administration of agreement and for the resolution of disputes.

Establishment of a multilateral and regional cooperation that would enhance the benefits of the agreement.

Though the primary goals of NAFTA might be described as focused toward tariff reduction, the goals and aims went above and beyond this.

TOPIC: Term Paper on NAFTA Historical Beginning of NAFTA Assignment

NAFTA also aspired to open sectors within agriculture, energy, textiles and the automotive industry that had been previously protected. It also opened up the U.S. Mexico border so that trade in services could occur, particularly in the areas of finance, transportation and telecommunications. NAFTA also established rules regulating the procurement of intellectual property rights by government officials. Safeguards were established which dictated how subsidies and unfair practices should be dealt with. Additionally, procedures were set up that described how private and agricultural disputes should be handled. Processes were also established dictating how implementation concerns related to NAFTA should be handled.

Source:U.S.-Mexico Chamber of Commerce)

Broad in scope, NAFTA incorporates many disciplines. Not solely focusing on eliminating tariffs on North American made goods, NAFTA also set out to accomplish the following:

Eliminate or at minimum institute strict rules on many non-tariff barriers

Eliminate restrictions on foreign investment so that non-discriminatory treatment can be realized for local companies in NAFTA countries owned by other investors

Regarding non-tariff barriers to trade, eliminate or impose strict rules such that negotiations can occur

Enables government purchasing regimes to firms in all three countries;

Ensure non-discriminatory treatment of local companies owned by investors in NAFTA countries, and eliminate foreign investment restrictions

Reduce or eliminate other barriers that exist that might prevent service companies from operating in and across U.S. borders

Prevent governments from utilizing monopolies to restrict trade by instituting strict rules

Enable border-crossing between all three countries for business personnel

Establishment of distinct dispute resolution mechanisms and comprehensive set of rules regarding intellectual property rights

The NAFTA and its agreements provide a "comprehensive framework of rules that seek to reduce or eliminate trade barriers while promoting worker rights and enhancing environment protection across North America"

Source: NAFTA, Benjamin Franklin Library, U.S. Embassy, Mexico)

What is NAFTA?

The North American Free Trade Agreement (NAFTA) is a comprehensive arrangement between the U.S., Mexico and Canada that calls for the reduction of tariffs, custom duties and any other trade barriers on goods and services via a comprehensive set of rules and regulations. Canada represents the first largest trading partner with the United States with Mexico falling into the number three spot respectively. The implementation of NAFTA resulted in creation of the "largest free-trade zone" globally. Part of NAFTAs goals included a desire to improve access to all markets and remove restrictions on investment. NAFTA also seeks to protect intellectual property rights and allows provisions for monitoring and investigation of environmental and labor abuses among and between the three countries involved.

NAFTA is a comprehensive rules-based agreement among the United States, Canada, and Mexico that took effect January 1, 1994. Signed by the governments of the three countries in 1992 and ratified in the U.S. Congress in November of 1993, NAFTA eliminated a majority of tariffs posing barriers to trade, while at the same time causing other tariffs to fall to zero over a period of between five and fifteen years. The agreement in essence broadened the scope of a 1989 free trade agreement made between the U.S. And Canada.

NAFTA is far reaching in its endeavors; it goes beyond simply the borders of Canada, Mexico and the U.S.; rather NAFTA provides a standard of market openness that provided implications for trade relations among many countries in the Western Hemisphere including Latin America and the Caribbean. Latin America and the Caribbean Basin in fact are currently among the fastest growing U.S. export markets. These two regions represent diversified commercial opportunities for U.S. businesses. NAFTA has resulted in a reduction in trade barriers in Latin America, however reform is still generally still lagging far behind the "standard" NAFTA intended to create. Among the countries still needing reform measures include Chile, and a group of countries referred to as MERCOSUR (Uruguay, Paraguay, Argentian and Brazil).

NAFTA provides provisions under which the U.S., Canada and Mexico can become a single, integrated market. This market would consists of more than 400 million people, and trade would encompass greater than 6.5 trillion dollars worth of goods, products and services each year.

Mexico is the world's second largest importer of U.S. manufactured goods and the third largest importer of U.S. agricultural products.

Mexico is an important partner in the NAFTA agreement. Mexico in fact is globally considered the second largest importer of U.S. manufactured goods. It is also the third largest importer of agricultural products from the U.S. Before NAFTA was created, tariffs in Mexico on average reached rates as high as 250% compared to U.S. duties. The NAFTA pact however, eliminated a majority of these tariffs. Alternatively, the U.S. And Canada had a long standing free trade agreement from 1989 onward.

Important to know also is that NAFT provides full protection of intellectual property rights; encompassed in this description includes patents, copyrights and trademarks associated with intellectual property. NAFTA also provides provisions for covering trade rules, and also allows rules that govern the settlement of disputes.

The Promise of NAFTA

NAFTA was formed with the vision of a global free trade zone; the largest in fact, worldwide from the Yukon to the Yucatan. Designed to open markets and stimulate trade and economic growth, when fully implemented NAFTA was to remove almost all of the barriers to trade and investment among and between the United States, Mexico and Canada. NAFTA was also designed to expand economic growth among and between the countries.

NAFTA also impacted agricultural trade, by removing non-tariff barriers between the United States and Mexico. These barriers were converted in one of two ways: to tariff-rate quotas or ordinary tariffs. Among the barriers to be converted included the import licensing system which existed in Mexico, which had been the largest and most significant barrier to U.S. agricultural sales.

Many tariffs wee planned to be eliminated immediately. Others were phased out over a period of five to fifteen years. Certain products were regarded as import sensitive including dairy and sugar.

NAFTA Provisions Stimulate Trade and Investment (Source: Western Pennsylvania International Business Newsletter, 1997)

Among the provisions of NAFTA include rights granted to foreign investors that guarantee that they receive equal treatment to domestic firms with regard to "the establishment, acquisition, expansion, management, conduct or operations of investments." Thus, under the treaty host nations are required to offer foreign investors equal rights and treatments, as they would companies within their domestic sphere. Foreign investors under the pact are also to be granted the right to "repatriate profits and capital." They are also afforded the right to fair compensation should any property be confiscated by the state.

The NAFTA treaty also provides for international medication in circumstances where host governments and investors are involved in disputes related to monetary reparations.

US investors interested wanting to engage in investment in Mexico prior to the implementation of NAFTA faced many barriers. U.S. investor's pre-NAFTA had to export goods and services in their products at predetermined levels as well as use a percentage of goods and services within their products that were domestic "to the host nation." Foreign investors were also required to disclose their technology to competitors in Mexico. Yet another barrier, a limit had been established that set a fixed percentage on exports.

Trade restrictions existing in Mexico prior to NAFTA were at best rigid; this was evident in many industries, including automotive production. Mexican law required for example, that… [END OF PREVIEW] . . . READ MORE

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APA Style

NAFTA Historical Beginning.  (2004, March 31).  Retrieved September 17, 2021, from

MLA Format

"NAFTA Historical Beginning."  31 March 2004.  Web.  17 September 2021. <>.

Chicago Style

"NAFTA Historical Beginning."  March 31, 2004.  Accessed September 17, 2021.