NAFTA

Is NAFTA really promoting Better Trade practices?

The North America Free Trade Agreement (NAFTA) promised that it would create countless numbers of jobs, raise the standard of living for Americans, Mexicans, and Canadians, and transform Mexico from a poor developing country into a more developed market available to buy exports from American and Canadian manufacturers. More stringent environmental standards across member countries would also improve environmental condition across North America. Opponents of the trade agreement argue that instead NAFTA motivates wage destruction as manufacturers race to reduce prices, thus decreasing the number of good U.S. Jobs and undermining America's control over domestic policy and health and safety standards.

One of the reasons there has been such conflicting views over the agreement is that never before have three nations in different stages of development ever tried to put in place such sweeping policy around creating better trade practices over such a large area. Now almost a decade after its implementation the jury is still out on the whether the agreement has really benefited member countries or hurt them.

Implemented on January 1, 1994, NAFTA is a trade agreement among the United States, Canada, and Mexico that liberalizes restrictions on trade among the three countries. Its main tenants are to reduce or eliminate import duties on products coming from member nations and to promote free competition and market access within the free trade area. In order comply as a qualifying product; a product must be made in a member country or if using component parts manufactured elsewhere, it must undergo sufficient processing within the member country. All member countries have a specific governmental office which monitors the agreement for compliance. In the United States this work is done by the Department of Commerce's Market Access and compliance office.

Determining whether NAFTA has really been better trade practice is made complicated by several reasons. One is that most of the tariff reductions and other free market motivators were supposed to be phased in over a 15 year period. Now in its 15th year some proponents of the agreement propose that not enough time has elapse to fortify the importing power of Mexico or the job creation power of the agreement. To make matters worse many of the economic troubles faces each member nation is part of a larger global economic malaise that cannot be attributed to NAFTA or eliminate it as a cause of job or demand destruction in the Free Trade Area.

It looks at this point that until the global recession runs its course and normal economic growth returns to the area can the effects of NAFTA be calculated. Until then it will be hard to for either side to make cognizant cases for whether NAFTA does or does not promote better trade practices.