The North American Free Trade Agreement (NAFTA) is a treaty signed by Canada, Mexico and the United States creating a mutual trade alliance in North America. The treaty was signed in 1992 and was effective from January 1st 1994. NAFTA was originally created to heighten financially viable integration in the USA, Mexico and Canada and its vision was to increased economic prosperity in these countries. The main concept of NAFTA was to make it easy for companies in these countries to accomplish domestic businesses.
According to the market research report, Publishing North America (NAFTA) Industry Guide 2017“, NAFTA eliminated tariffs on all goods traded across the three nations. Any one of the countries can withdraw themselves from NAFTA, after giving a six months notice period. A research on NAFTA states that there was a mixed effect on the US labour force. Somehow few industries have shrunk and others have grown. In addition, few production industries were moved to Mexico resulting in plant shutdowns and mass layoffs, regardless of trade. As stated by NAFTA supporters, there was neither huge unemployment nor a large economic gain. The most affected workers are those who depended heavily on tariff protections in place prior to NAFTA. The affected industries wage growth dropped by 17% compared to the wage growth in unaffected industries.
As per the Council on Foreign Relations (CFR), NAFTA has given a major boost to Mexican farm exports to the US, which has tripled since NAFTA’s introduction. In Mexico, Mexican manufacturing jobs were created in thousands, which positively impacted the Mexican productivity and consumer prices. The Mexico’s economy started to grow rapidly from the year 1993, but poverty sill remains same as it was in the year 1993 with increase in unemployment. NAFTA deepened Mexico’s dependency on food imports rather than fulfilling its promise of providing cheaper food to Mexicans.
Canada witnessed strong growth in cross-border investment as per CFR. The USA and Mexican investments in Canada have tripled and specifically Canadian agriculture was boosted. The employment in Canadian manufacturing industries was steady. Also, the productivity gap between the Canadian and US economies remains liberal.
Commercial samples should not exceed US $1 or equivalent Canadian or Mexican currency and samples can be imported duty free if they are marked torn or perforated or unsuitable for sales. The importing country has the right to deny NAFTA if NAFTA regulations are not followed and if the goods are not manufactured in one of the NAFTA countries. All goods purchased in Canada, Mexico and the united States are subject to customs duties and taxes. The amount of customs duties charged is based on the individual country and their corresponding tariff system.
The director of emerging markets investment strategy at UBS Wealth Management reported that Mexico is standing at a crossroad. Even if Mexico achieves growth of above 2%, it still has a long way to go before it can achieve the annual growth rates of 5%. The Bank of Mexico is confident that it would reach the target by the end of next year. To achieve this target Mexico needs to accelerate implementation of structural reforms and tackle the country’s economy. The Mexican government also needs to deal with issues such as widespread corruption, crime and a low-quality education system, in order to boost the sluggish productivity.
Each NAFTA country is seeking more open trade relationships with non-NAFTA countries searching for new markets for agricultural and non-agricultural products. NAFTA countries exhibit a tremendous development towards removing trade barriers within the countries worldwide. The world’s population is expected to grow from 6.9 billion to 8.3 billion over the next two decades. Therefore, all the nations worldwide anticipate increasing their productions in agriculture or non-agriculture products as per the needs of the growing population.
All the attempts for cross country trading, the NAFTA regions will show a huge growth and growing markets in the years to come. Out of the NAFTA countries, US is expected to have an increasing population in the next two decades compared to Mexico and Canada. As per the researchers, demographic dividend, diminished pressure on social service budget, facilitate higher saving rates, larger investments in education, focus on capital-intensive economic activities and many more factors that can lead to higher rate of economic growth. NAFTA simplified numerous complications by eliminating tariffs, quotas, import licensing requirements, and other policies. Better decision making and country’s hopes are a great foundation for NAFTA prosperity.
Key Topics Covered in the Report:
NAFTA Industry Market Research Report
NAFTA Industry Guide
Mexico Farm Exports
North America Industry Trade Market
NAFTA Norms on Food Production Output
NAFTA Norms on Import Volume
NAFTA Industry Market Share
NAFTA Industry Market Size
NAFTA Industry Market Trends
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Ankur Gupta, Head Marketing & Communications