Analysis of the North American Free Trade Act (NAFTA)   Term Paper ID:27236 Click to get this paper

Essay Subject: Analyzes 3 separate aspects of NAFTA. First examines the history of the trade pact, next the current state of relations among the 3 trading partners, last the outlook & challenges for the future.... More...

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Paper Abstract: Analyzes 3 separate aspects of NAFTA. First examines the history of the trade pact, next the current state of relations among the 3 trading partners, last the outlook & challenges for the future. Paper Introduction: Analysis of the North American Free Trade Act (NAFTA) Introduction The North American Free Trade Act (NAFTA) has been in place in the United States, Canada, and Mexico for more than three years, having been enacted with many loud and vocal concerns expressed by both the Congress and the media (When neighbours embrace..., 1997). NAFTA has been called, rightly so, the most comprehensive trade relationship ever negotiated among friendly countries. NAFTA also will go down in economic history as the first time a developing country has agreed to become a trading partner and opening up its economy to full competition with those countries (Hirsch, 1995). This analysis will deal with three separate aspects of Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. This analysis will deal with three separate aspects of NAFTA. "The free-trade coalition in Congress is crumbling from both the left and the right," says AFL-CIO trade specialist Thea Lee (59). Along with the additional revenues that seem to be occurring, manybusinesses that are actively utilizing the NAFTA policies and mandatescomplain of overwhelming administrative headaches associated withcompliance. That attitude was not returned and an era ofprotectionism developed in our Asian and European trading partners. Analysis of the North American Free Trade Act (NAFTA)Introduction The North American Free Trade Act (NAFTA) has been in place in theUnited States, Canada, and Mexico for more than three years, having beenenacted with many loud and vocal concerns expressed by both the Congressand the media (When neighbours embrace..., 1997). jobs over the past three years. executivesgenerally did not expect to increase their sourcing of products and rawmaterials in North America (Gooley, 1997). (1997, July 14) NAFTA helped both U.S. WWD,174(35), 11 Pearson, D. At the same time, each of the threeNAFTA trading powers must continue to keep lines of dialogue open among andbetween key leaders of the three nations. News & World Report, 123(1), 59. Political discontent. companies purchased $49.5 billion worth of Mexican goods in 1994. Economic NAFTA thoughts:Economic benefits and politics surrounding the North American Free TradeAgreement. markets to lettheir products in. It is only logical, of course, that the most wide-ranging trade agreement ever would also have the most elaborate set of trade rules ever invented (13). The following year, that figure rose 24 percent to $61.7 billion (Gooley, 1997, 76). The real day-to-day business of NAFTA(North American Free Trade Agreement). (1997, July 7). References Gooley, T.B. Although the Mexicans can't backout of NAFTA, Cardenas wants to review how the agreement is working inagriculture, textiles, and auto parts" (When neighbours embrace..., 1997,23).Outlook for the Future Even though debate still rages among the representative bodies of allthree governments, none of the three seem to be entertaining even theslightest hint of dissolving the treaty. The Financial Post, 5 Ostroff, J. 1759, N5 When neighbours embrace: the NAFTA effect (North American Free TradeAgreement). How the three members feel. What is not said in the agreement is that only the three parties to the agreement are intended to receive its benefits. A report by the labor-sponsored Economic Policy Institute saidthat as many as 25 , U.S. As the three governments admit, regionaltrade is really trade by rules (Hirsch, 1995; Gooley, 1997). Hirsch, J.(1995, September 1). manufacturing jobs. Likewise, U.S. A report in The Economist (July 5, 1997)says: "Wages are still falling, and the average Mexican feels pinched byZedillo's tight anti-inflation policy. Holstein, W.J. In geometry, a triangle is thestrongest and most stable systems of architecture. jobs have been lost" (Morton, 1997). CMA Magazine. The challenge facingNAFTA is to ensure that the triangle is also the strongest and most stablesystems of importing and exporting. (1997, July 5). NAFTA has been called,rightly so, the most comprehensive trade relationship ever negotiated amongfriendly countries. That number rose to $123.5 billion in 1995, an increase of 11 percent. created 311, ofthe 8.6 million new jobs in the U.S. As Hirsch (1995) points out: to meet the broad-ranging objectives of the NAFTA objectives, a huge legal and administrative framework had to be put in place. The act's guiding objectives state that NAFTA would endeavor: * to eliminate barriers to trade in, and facilitate the cross-bordermovement of, goods and services between the parties; * to promote conditions of fair competition in the free trade area; * to increase substantially investment opportunities in the free tradearea; * to create effective procedures for the implementation andapplication of the agreement, for its joint administration and forresolution of disputes; and, * to establish a framework for further trilateral, regional andmultilateral cooperation to expand and enhance the benefits of theagreement (Hirsch, 1995). America and Canada, already linked by their own trade deal since 1989, would be enriched by the opening of Mexico's economy; Mexico would rise on a flood of trade with and investment from its wealthy new friends (When neighbours embrace..., 1997, 21).That dream is still within the realm of possibility, but it will not beentirely painless to achieve. First, the bad news. NAFTA-related problemshave been identified within most American industries: including the steeland metals manufacturers (Kelly, 1997); feedstuffs and grains (Pearson997); farming and agriculture (Study outlines NAFTA..., 1997);manufacturing (Morton 1997); and petroleum (Holstein and Robinson 1997). The overall purpose of this sweeping trilateral agreement was tocreate a level playing field for businesses in all three countries. & Robinson, L. (1997, April 21) NAFTA is good medicine for U.S.,everybody else. Canadian-United States disputes underNAFTA's forerunner, the Federal Trade Administration, and now under NAFTAitself, have been highly publicized, but because they have been settledaccording to a well-formulated set of rules, they have been won by Canadain almost every case (Hirsch, 1997). A report in the Economist (July5, 1997) suggests that the original vision of the three countries was that, NAFTA was a distributor of milk and honey. The report stated that thethree-year-old pact among Canada, Mexico and the U.S. U.S. Opposition to the treaty also is mounting from conservative Republicans like Duncan Hunter of California. In 1994, for example, the United States imported $111.7 billion worth of Canadian goods. A look at theimpact of various trade pacts throughout the western hemisphere. The increased paperwork is a correlative effect of the NAFTAguidelines themselves. Many reports concerning NAFTA concur that themood among many members of the 1 5th Congress are turning against NAFTA.Holstein (1997) sums up the mood: It is far from certain that Congress will grant the president the authority to expand free trade to Latin America and Africa. That waswhen the American leader, while speaking at the Miami Summit of theAmericas, vowed he would see to it that NAFTA would be expanded to SouthAmerican countries, "thereby creating a hemispheric free-trade area by2 5" (Ostroff 1997a, 24). They include: access to Canadian dairy and poultry markets, grain trade between the US and Canada, feeder cattle to Canada and imports of winter vegetables from Mexico. Immediately after that war, theU.S. Morton, P. House Democratic Leader Richard Gephardt is signaling he will turn NAFTA into a presidential issue against Vice President Al Gore; political observers believe Gephardt, in part, is attempting to solidify support from organized labor, which despises NAFTA and is dead set against giving Clinton "fast-track authority" to negotiate future trade deals. (1997, May). An analysis of recent press reports concerning NAFTA shows that thereis good news and bad news. (1997, August 19) New players to join NAFTA? There is also some good news. Study outlines NAFTA benefits to US farm trade. On a scale of 1 to 7, U.S.respondents ranked the possibility of increased sourcing from Mexico as 3.8and from Canada just 3.4."Three years later," says Gooley, statistics indicate that the survey respondents were very conservative in their expectations. . WWD, 174(9), 24. Section three presents the outlook for thefuture, looking at some of the challenges facing the NAFTA partners.History The NAFTA agreement came as the result of many years of confusingtrade policies that followed World War II. A major executive with the United States Association ofImporters of Textiles and Apparels was quoted as saying: "The big story hasto be that Mexico and Canada are the big winners under NAFTA and havebecome a magnet, shifting production there not so much from the Far East asfrom South and Central American countries" (Ostroff, 1997b, 11) Regarding foodstuffs import and export, several key issues remainunsolved. Soon after he made that announcement, the 1 5thCongress became more protectionist and organized labor exerted pressure.The result was that Chile, a major textile manufacturer, was effectivelyshut out, perhaps for the short term only, but the NAFTA entry doorsdefinitely closed. For that answer, consider the data in this nextsection.What Is Going on Now? Morton (1997) explains one aspect of the report: "Most labor groupsand NAFTA opponents say Mexico is simply stealing manufacturing jobs fromthe U.S. report sings NAFTA's praises: Studyresults counter critics who blame the three-year-old trade pact for lostU.S. trade deficit with Canada. The second section will deal with the current state of relationsbetween the trading partners. and Mexico;Especially boosts Mexico's trade higher. Inresponse, the United States, Canada and Mexico began discussing thepossibilities of a trade pact that would be similar to that proposed forthe European Common Market. Ostroff, J. Overall, the future of NAFTA seems stable, although the threecountries have much internal reevaluation to do concerning their individuallabor, political, and social issues. NAFTA also will go down in economic history as thefirst time a developing country has agreed to become a trading partner andopening up its economy to full competition with those countries (Hirsch,1995). AgraEurope. (1997, May 29). Other countries are excluded; so to ensure that only Mexican, U.S. Has it accomplished this? NAFTA battles continue among participants.American Metal Market, (1 5)1 3, 11A. and Canadian goods are granted duty-free, permit-free, restriction-free movement within the free trade area, it was necessary to put in place the most elaborate system of trade controls ever known. A leading agricultural journal summed up those issues: Four main trade issues between the US and its NAFTA trading partners still need to be addressed. One of the largest philosophical decisions leaders of the threemembers of the NAFTA pact will be facing will be whether or not to go alongwith President Clinton's sweeping announcement in December 1994. . Thefirst section will look at the history of NAFTA, providing a brief overviewof the events leading up to the treaty, including some major tenets of thattreaty. The Economist, 343, 21-24. Logistics Management,36(5), 76A. between 1993 and 1996, and eliminatedthe U.S. In Mexico, economic growth is increasing largely on the basis ofexports to the United States, but many Mexicans are said to be irritatedthat the trade-boosted recovery has not trickled down to them (Whenneighbours embrace..., 1997). Kelly. (1997, August 8). 69, 11-15. However, it explained that these problems were not necessarily caused by NAFTA (Study outlines NAFTA..., 1997, N5). N.E. Canada, toall appearances embraces the rules and would perhaps like more, having allaspects of trade governed by ever more precise rules so as to avoiddisputes of the kind that have been going on with the United States foryears (Hirsch, 1997; Kelly, 1997). Is NAFTA working? (1997, July 12) U.S. In 1994, a survey was made of leading logistics executives in theUnited States, Canada, and Mexico which revealed that U.S. Companies across the board express irritation concerning theincreased record-keeping (Gooley, 1997). A report mandated by the 1 5th Congressdesigned to analyze the results of the NAFTA pact to date (Morton, 1997)shows that the United States' boost in exports to Canada has created189, U.S. sent hundreds of billions of dollars in foreign aid and bank loans toEurope, Asia, Africa, Latin America, then threw open U.S. Feedstuffs (69)16, 14. The best way to summarize this complex socio-economic history is to let the primary evidence be the objectives of theNAFTA proposal. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.