North American Free Trade Agreement (nafta)

NAFTA:

North American Free Trade Agreement

Implementation of the North American Free Trade Agreement (NAFTA) began on January 1, 1994, and is one of the United States’ most significant regional trade agreements. The final provisions of the NAFTA were fully implemented on January 1, 2008. With full implementation, the last remaining trade restriction on a handful of agricultural commodities such as U.S. exports to Mexico of corn, dry edible beans, nonfat dry milk and high fructose corn syrup and Mexican exports to the United States of sugar and certain horticultural products are now removed. As you can see this agreement will have the potential to remove most barriers to agricultural trade and investment among the United States, Canada, and Mexico and has benefited farmers, ranchers and consumers throughout North America.

Under the NAFTA, all non-tariff barriers to agricultural trade between the United States and Mexico were eliminated. In addition, many tariffs were eliminated immediately, with others being phased out over periods of 5 to 15 years. This allowed for an orderly adjustment to free trade with Mexico, with full implementation was set to begin January 1, 2008. The agricultural provisions of the U.S.-Canada Free Trade Agreement, in effect since 1989, were incorporated into the NAFTA. Under these provisions, all tariffs affecting agricultural trade between the United States and Canada, with a few exceptions for items covered by tariff-rate quotas, were removed by January 1, 1998. Mexico and Canada reached a separate bilateral NAFTA agreement on market access for agricultural products. The Mexican-Canadian agreement eliminated most tariffs either immediately or over 5, 10, or 15 years. Tariffs between the two countries affecting trade in dairy, poultry, eggs, and sugar are maintained. (Paul)

Also, under the General Agreement on Tariffs and Trade (Article XIX), and the U.S.-Canada Free Trade Agreement (Chapter 11), countries may take emergency action if increased imports cause injury to domestic producers. This concept was carried over into the NAFTA. Chapter 8 of the NAFTA permits, under specified conditions, the parties to impose a temporary, emergency safeguard measure – that is, an increase in the tariff to the prevailing MFN level - in the event imports cause, or threaten to cause, serious injury to domestic producers. In 2008, a NAFTA partner could, assuming the associated conditions are satisfied, invoke a Chapter 8 safeguard provision until 1 year following full implementation of the NAFTA commitments, i.e., until January 1, 2009. Beyond January 1, 2009, the NAFTA Partner could maintain a safeguard arrangement only with the consent of the Party against whose good the action would be taken. (Teslik)

The biggest myth or argument you hear with NAFTA is that hasn’t helped the United States. I wasn’t sure if this was true so I decided to do this research project after watching the Democratic debate between Hillary Clinton and Obama Barack. I saw the intensity at which they argued that topic of NAFTA more passionately than any other. I had no idea what NAFTA consisted of and I felt that I better get up to speed with what would be shaping the U.S. Presidential race in 2008.

I found that Canada and Mexico are the first and second largest export markets for U.S. agricultural products and goods. Exports to the two markets combined were greater than exports to the next six largest markets combined. From 1993 to 2006, the value of U.S. agricultural exports worldwide climbed 65 percent. Over that same period, U.S. farm and food exports to our two NAFTA partners grew by 198 percent, from $293 billion to $875 billion. (Teslik) Also, each day the NAFTA countries conduct nearly $2.2 billion in trilateral trade. Since 1993, U.S. merchandise exports to Canada and Mexico grew more rapidly – at 158 percent – than our exports to the rest of the world combined (108 percent). (United States Department of Agriculture)

In addition I discovered that U.S. farm and food exports to Mexico exceeded $11.5 billion in 2007, the highest level ever under NAFTA. From 2001 to 2006, U.S. farm and food exports to Mexico climbed by $3.6 billion to $10.8 billion. U.S. exports of soybean meal, red meats, and poultry meat all set new records in 2006. Lastly, Canada had been a steadily growing market for U.S. agriculture under the U.S.-Canada Free Trade Agreement (CFTA), with U.S. farm and food exports reaching a record $11.9 billion in 2006, up from $4.2 billion in 1990. Fresh and processed fruits and vegetables, snack foods, and other consumer foods account for close to three-fourths of U.S. sales. U.S. employment, manufacturing output, and compensation have all risen more in the period