North American Free Trade Agreement (NAFTA) I. Brief overview of NAFTA (mainly for in-class presentation) a. NAFTA Introduction b. Original Expectations II. NAFTA over the last 12 years a. Impact on the U.S. economy i. Jobs (Employment Growth) ii. Labor iii. Income iv. Imports vs. Exports (Trade Deficit) 1. Agriculture v. Economic growth b. Impact on Canadian economy c. Impact on Mexican economy d. Global Impact i. International Business ii. FDI (Foreign Direct Investment) III. NAFTA - The Good, the bad and the ugly a. Successes b. Short Comings i. Lessons Learned c. Broken Promises IV. NAFTA’s role going forward a. What needs to be fixed? i. Current Issues and Challenges b. How do you fix it? i. …show more content…
It is believed by many leading economists and theorists that the process of dollarization is very important and that it would greatly further the cause of NAFTA. “Dollarization occurs when residents of a country extensively use the U.S. dollar or another foreign currency alongside or instead of the domestic currency. Unofficial dollarization occurs when individuals hold foreign-currency bank deposits or notes (paper money) to protect against high inflation in the domestic currency. Official dollarization occurs when a government adopts foreign currency as the predominant or exclusive legal tender” (Mack 1999). This is proposing that the NAFTA becomes more like the EU, and has a single currency. Many have used the term dollarization, but they fail to close in on the real context of the situation. ‘Dollarization’ has been quite often very loosely used in many of the literature and references, where it is said that the foreign money would completely take over the local currency. This is hardly true. What many people fail to understand is the great benefit that this can have on behalf of and for the cause of NAFTA. It is extremely important to keep three useful concepts to keep in mind when considering the incorporation of it via NAFTA: “Asset Dollarization - The term Asset Dollarization refers to the use of foreign currency in any of the three functions of money: unit of account, means of exchange and store of value. Currency Substitution refers to the use of
The effects of NAFTA on Mexico, U.S, and their economic situation have impacts on political interests. There was main objective of Mexico in pursuing free trade area with the United States or with other countries to stabilize the Mexican economy in sustainable way and promote economic development by attracting huge foreign direct investment means of increasing exports, in house manufacturing and creating jobs. NAFTA would improve investor confidence in Mexico has directly impact to increase export diversification, create job market increase wage rates, reduce poverty, improve standard of living, quality and economic growth
Since its creation in 1994, the North American Free Trade Agreement (NAFTA) is a major issue of debate in the United States. The most important issue with NAFTA is how the agreement affects the U.S. economy. NAFTA has had a broad impact on the U.S. economy through creative destruction, globalization, job restructuring, and isolationism. All of these components have had both positive and negative influences on the U.S. economy. Creative destruction creates new jobs to replace the ones that were originally ended by NAFTA, globalization expands ideas, products, and business, but also causes the U.S. to lose money, job reconstruction recreates jobs to fit the functions of NAFTA and sometimes causes workers to lose their original jobs, and isolation
The North American Free Trade Agreement created the world's largest free trade area. It links 450 million people together all around the world. Its member’s economies generate $20.8 trillion in gross domestic product. NAFTA was hidden in controversy. Advocates of NAFTA viewed the agreement as a valid extension of U.S. trade liberalization policy, while adversaries of NAFTA criticized the agreement as a result of a great business. Facing severe opposition in the United States, NAFTA gave rise to a diverse partnership of environmentalists, organized labor, protectionist Democrats and general independents. They claimed that the approval of NAFTA would result in a mass exodus of jobs from the United States and Canada into Mexico, where wages were
On January 1st, 1994, Canada, the United States of America, and Mexico had signed a free trade agreement, under the name - the North American Free Trade Agreement (NAFTA). This Free Trade Agreement was created to achieve its goal of eliminating barriers to trade and investment between Canada, Mexico and the United States of America. However, the question that politicians and economists of our nation are facing is whether Canada should remain in NAFTA with its partners, United States and Mexico. Despite a multitude of benefits that NAFTA is said to have by our political elites, 20 years later, it is evident the agreement has been counterproductive; which is evident by the slow move by Canadian manufacturers to Mexico, significant losses in
Since then, NAFTA has continued to be a topic of hot debate between economists and politicians alike as the United States economy weathered the tech bubble in the late 90s, the 2008 financial crisis, and—more recently—a time of unprecedentedly low unemployment (Coughlin,
NAFTA is also seen as part of the neoliberal reforms linking the United States, Canada, and Mexico in a regime of free trade. The policy on the Mexican side aims at easing the entrance of foreign capital and
By time President George H.W. Bush took the White House, Mexico had imposed tariffs on U.S. imports that were 250% higher than those the U.S. charged Mexico (Amadeo, 2017). Bush intended to negotiate a more liberal trade agreement with Mexico until Canada requested a trilateral agreement in 1991 (Amadeo, 2017). NAFTA’s framework was hammered out between the three countries and, two years later, they finalized the agreement. Congress passed NAFTA and President Bill Clinton signed it into law in November 1993. According to Article 102 of the agreement, under NAFTA, the three North American countries would mutually benefit under a “most-favored-nation” status. The agreements objectives are as follows:
The North American Free Trade Agreement (NAFTA), came into effect on January 1, 1994, creating the largest free trade region in the world, generating economic growth and helping to raise the standard of living for the people of all three countries participating. By strengthening the rules and procedures governing trade and investment, the NAFTA has shown to be a great base for adding to Canada’s prosperity and has set a valuable example of the benefits of trade liberalization for the rest of the world. NAFTA was designed with many economic results in mind. Hopes were that not only trade would be easier, cheaper, and easier for all countries involved, but economic wealth and growth would follow. The support for NAFTA was spilt among the
The North American Free Trade Agreement (NATFA) shoved the American worker down a flight of stairs in the name of "Globalization"
The history of NAFTA began early in the 1980s with Ronald Reagan who proposed a North American common market in his campaign. It came into effect in 1994 becoming one of the world's largest free trade zones. The true purpose of NAFTA is the specific goals such as grant the signatories most favored nation status. In total NAFTA has seven goals to have completed, and it completed them all. When the competitiveness increased the three countries in the global marketplace. Canada, United States, and Mexico are mostly involved when it comes to NAFTA. On January 1, 1994, is when it was implemented. The North American free trade agreement, between three countries, Mexico, Canada, and the U.S. With trade in farming, textiles, and automaking was
The final draft of the agreement had four major types of provisions. First, NAFTA promised to reduce, and in the near future, eliminate all tariffs (taxes on imports) among the three countries. The reduction in tariffs happened almost immediately between Mexico and the United States. The tariffs fell by 50% in the first year of the agreement and all tariffs were expected to be eliminated in a span of 15 years. Secondly, NAFTA implemented rules in the three countries that would protect intellectual rights and investments.
The NAFTA is a trade and investment agreement agreed in 1992 by the United States, Mexico and Canada and came into force in 1994 with the aim of promoting free trade and investments in the North American Region. From this date, the NAFTA has been one of the most criticized agreements in bases of the inequality represented by it. First of all, the agreement was signed among three nations, which are in a different economic status. Specifically Mexico comes to be far to reach the level of development of the USA and Canada, and nevertheless is being regulated under the same agreement. Besides its clear inequality, the agreement also possesses one of the most complex ISDS provisions. These provisions have resulted on a pattern for further treaties
The North American Free Trade Agreement, otherwise known as NAFTA, has been a topic of hot debate since before its ratification in 1994. From economists to diplomats and from politicians to blue-collar workers, most everyone had opinions and speculations on how NAFTA would affect the nations – be they positive or negative assumptions. Now 23 years later, the effects of this treaty binding the United States, Canada & Mexico are being fully felt and can be examined in depth. One area of major concern for the United States during the negotiations for NAFTA – immigration from Mexico – has continued to garner attention nationwide throughout the years the treaty has been in effect. How did the ratification of this tripartite agreement for free
As the result of the U.S. dollar appreciating, consumer’s U.S. dollar has more worth compared to other currencies. The foreign exchange rate “is the price of one currency expressed in terms of another currency” (Eiteman, Stonehill, & Moffett, 2016, p. 129). Let us take for example the U.S. dollar and the Mexican peso and define foreign exchange quotes. I recently traveled to Mexico City (September 21) and Puebla (September 23), in both location making foreign exchange transactions. As stated
Panama, on the other hand, dollarized as a result of political and historical processes rather than as a culmination of crisis-inducing events. Panama is one of the oldest dollarized countries, which is due to the fact that the country has been a historical host of regional trade and transit channels. As a result, the country has experienced high levels of international influence, with the United States acting as one the country’s major trading partners. The fact that Panama was already economically and financially integrated in regional markets meant that the adoption of the dollar was more of a natural step for the country in comparison to Ecuador and Argentina.