The North American Free Trade Agreement (NAFTA) is actually the world’s largest Free Trade Agreement. In its 2,000 pages, eight sections and 22 chapters, it ties the two developed nations with an emerging market for the first time. Together, the three nations- Mexico, The United States and Canada have a combined GDP of over $20 trillion dollars. The agreement went from concept to law over the course of three presidencies starting in the eighties with Ronald Raegan and was signed into effect by Bill Clinton in the nineties. NAFTA has caused much controversy over the years and the only thing causing more is the recent threat to leave it.
The great Debate
Since last November, NAFTA has been on the chopping block. Most of the buzz was around the idea of leaving the agreement. Back in April, the leader of Canada Prime Minister Justin Trudeau and Mexican President Enrique Peña Nieto were set to meet with Trump to renegotiate the terms and conditions. Throughout most of 2017 the U.S has promised to leave unless certain measures were met, although when no one could come to a consensus the U.S still has hung on to the FTA.
Pros and cons
The biggest criticism has been that NAFTA has taken manufacturing away from the United States and the new administration has made it a part of their mission to bring it back. Especially since sending jobs to Mexico due to lower wages, it actually drove down wages in the U.S. Although, due to the free moving of goods between nations, prices have fallen on items like gasoline and produce, according to The Balance. That’s the tough call with NAFTA, there has been a lot of positives that have come to those bound by it, but also some setbacks.
Some of the new goals with the renegotiation have to do with the internet and dairy, interestingly. The U.S hopes to limit liability for companies like Google, Facebook, amongst others that are the hosts for online content. The LA Times reports that it is directly opposed by record labels, production companies and those who create, or represent those who create the content. The negotiations are also seeking access to the Canadian dairy market by U.S dairy producers as they believe it “distorts trade.”
While particular industries have had a seat at the negotiation table, a U.S exit from NAFTA would affect all industries involved. From apparel, to agriculture to much more, the new trade landscape amongst our neighbors will create a new world in which companies will have to relearn how to navigate.