Define North American Free Trade Agreement
The North American Free Trade Agreement, or NAFTA, is an agreement between the governments of the United States, Mexico and Canada that established the world's largest free trade area in 1994. NAFTA states that trade between the three nations will be essentially tariff-free in order to increase imports and exports, increase investment opportunities and "promote conditions of fair competition" between the nations. Unlike previous U.S. trade agreements, NAFTA includes side agreements on environmental and labor policies, as well as an independent NAFTA secretariat to oversee trade disputes.
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History
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The U.S.-Canada Free Trade Agreement was a bi-national precursor to NAFTA that was active between Jan. 1, 1989, and the launch of NAFTA on Jan. 1, 1994. Though U.S. President George H.W. Bush initiated negotiations to ratify NAFTA in 1992, negotiations didn't conclude until late 1993. NAFTA came into effect under the leadership of U.S. President Bill Clinton, Canadian Prime Minister Jean Chrétien and Mexican president Carlos Salinas. NAFTA included milestones the countries needed to meet by Jan. 1, 2008, when the last of its provisions were to be enacted.
Features
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When trade disputes arise between Canadian, American and Mexican industries and governments, NAFTA's secretariat oversees a resolution process. The secretariat is an impartial, independent NAFTA organization with offices in Ottowa, Mexico City and Washington, D.C. NAFTA also has side environmental and labor agreements, known as the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC), respectively.
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Effects
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According to the Office of the United States Trade Representative, "NAFTA created the world's largest free trade area, which now links 444 million people producing $17 trillion worth of goods and services" as of 2009. In 2008, Mexico and Canada were "the top two purchasers of U.S. exports," and Canada was the United States' No. 1 supplier of imports, with Mexico the No. 3. Direct investment from the U.S. in NAFTA countries' stocks rose 11.3 percent between 2006 and 2007, and NAFTA countries' investment in U.S. stocks rose 21.4 percent during the same period.
Pros and Cons
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Aside from reported increases in international trade and investment between Mexico, Canada and the U.S., NAFTA is celebrated for increasing the value of U.S. agricultural exports worldwide by 65 percent since 1994. Furthermore, NAFTA is often credited for increasing jobs and reducing poverty in Mexico, as well as increasing the standard of living in all three countries. Critics of NAFTA question NAFTA's influence over these factors. According to Katrina C. Arabe of ThomasNet, NAFTA is often blamed for substantial job loss in the U.S. and the decline of small farms in Mexico, as well as the disintegration of Canadian social programs. Since its inception, NAFTA has been a hotly debated political issue.
Debate
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In March, 2008, the Office of the United States Trade Representative released a fact sheet titled "NAFTA---Myths vs. Facts." The document asserts that NAFTA has achieved its core goals, it has not hurt U.S. jobs, wages or its manufacturing base, it has not hurt Mexican wages and it has made strides to improve the environment. U.S. Democrats often claim that NAFTA has failed to achieve its environmental, labor and job-protection ideals, while U.S. Republicans tend to cite information to the contrary. Both sides work to dispel what they perceive to be myths about NAFTA.
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