The North Atlantic Free Trade Agreement is an agreement with liberalizes trade between North American nations. These nations include Canada, Mexico, and the United States, which, in conjunction, form a trilateral bloc in the North American region. This agreement is aimed at ensuring free trade between the nations in order to facilitate overall economic progress. Free trade means that trading barriers, regulations, duties, tariffs and restrictions are all eliminated, though with the exception of certain agricultural products (Hart). The U.S. President, Donald Trump, intends to commence negotiations over the North Atlantic free trade agreement with Mexico and Canada in order to support and improve the United States economy.
The purpose of the agreement is to remove all trade barriers which hinder the free exchange of goods and services between Canada, the U.S., and Mexico. In other words, the agreement’s purpose is to cut down trading costs, heighten business investments and make North America more competitive in the global financial market. NAFTA aims at incorporating all sectors of the economy, which include agriculture, manufacturing, and investments, as well as other significant sections such as government procurement, sanitary measures, protection of property rights and dispute settlement processes, which are important for the overall growth of an economy. According to Trump, the trade agreement is bound to enable access to higher-paying jobs and also provide the members with greater opportunities for developing their economies.
The North Atlantic trade agreement has already achieved its sole purpose of removing all trade barriers between the US, Canada, and Mexico. The trade agreement has also achieved its secondary purpose of making the member countries more competitive in the global financial market (Hufbauer ET AL.) Achieving both goals has made the agreement to be termed as the largest and most successful free trade worldwide. However, the trade agreement has been criticized, and its success comes at a cost. For instance, the agreement has been linked with the increase in the unemployment rate in the U.S. It has also been linked to the exploitation of the Mexican environment and the farmers.
Donald Trump feels that the terms of the agreement need to be renegotiated. He requires Mexico to eliminate the value-added tax imposed on U.S. companies. According to him, the V.A.T acts a tariff on products exported from the U.S to Mexico. Trump also requires the end of the maquiladora program, which he believes undercuts American employees through sending jobs to Mexico. The president threatens to withdraw from the trade agreement if Mexico does not adhere to his set terms and also threatens to impose a 35% tariff on imports from Mexico.
Mexico has a lot to lose if the US withdraws from the pact. The Mexican state is arguably the state that is bound to suffer when the U.S. abandons the agreement. This is due to the fact that most Mexican jobs depend on the trade between the U.S. and Canada. On the other hand, pulling out of the agreement would have adverse effects on the US economy by jeopardizing almost 14 million U.S jobs, exposing businesses to high tariffs and negatively impacting a lot of consumers.
In conclusion, the NAFTA agreement has played a significant role in improving the economic conditions of the member states; this has been achieved through the elimination of trade barriers between the countries and heightening their competitiveness in the global market. In this essence, the idea of renegotiation should be acted upon to avoid withdrawal from the pact level of the trading ground to avoid trade unfairness and inconveniencing some of the member states.
Work Cited
Hart, Michael. A North American Free Trade Agreement: The Strategic Implications for Canada. IRPP, 1990.
Hufbauer, Gary Clyde, and Jeffrey J. Schott. NAFTA: An assessment. Peterson Institute, 1993.
