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The North American Free Trade Agreement ( NAFTA; Spanish: Tratado de Libre Comercio de América del Norte, TLCAN; French: Accord de libre-échange nord-américain, ALÉNA) is an agreement signed by , , and the , creating a trilateral in . The agreement came into force on January 1, 1994." Free Trade Agreements". Office of the United States Trade Representative. Retrieved 2016-08-23. It superseded the Canada–United States Free Trade Agreement between the U.S. and Canada.

NAFTA has two supplements: the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC).

Most economic analyses indicate that NAFTA has been beneficial to the North American economies and the average citizen, but harmed a small minority of workers in industries exposed to trade competition. Economists hold that withdrawing from NAFTA or renegotiating NAFTA in a way that reestablishes will adversely affect the U.S. economy and cost jobs. Https://www.ft.com/content/b0f343aa-ab3a-3657-8b57-f0086cfaa006< /ref>


Negotiation, ratification, and revision (1988-94)

The impetus for a North American free trade zone began with U.S. President , who made the idea part of his campaign when he announced his candidacy for the presidency in November 1979. Canada and the United States signed the Canada–United States Free Trade Agreement (FTA) in 1988, and shortly afterward Mexican President Carlos Salinas de Gortari decided to approach US president George H. W. Bush to propose a similar agreement in an effort to bring in foreign investment following the Latin American debt crisis. As the two leaders began negotiating, the Canadian government under Prime Minister feared that the advantages Canada had gained through the Canada–US FTA would be undermined by a US–Mexican bilateral agreement, and asked to become a party to the US–Mexican talks.Foreign Affairs and International trade Canada: Canada and the World: A History – 1984–1993: "Leap of Faith

Following diplomatic negotiations dating back to 1990, the leaders of the three nations signed the agreement in their respective capitals on December 17, 1992.

(1994). 9780379008357, Oceana Publications.
The signed agreement then needed to be by each nation's legislative or parliamentary branch.

The earlier Canada–United States Free Trade Agreement had been controversial and divisive in Canada, and featured as an issue in the 1988 Canadian election. In that election, more Canadians voted for anti-free trade parties (the Liberals and the New Democrats), but the split of the votes between the two parties meant that the pro-free trade Progressive Conservatives (PCs) came out of the election with the most seats and so took power. Mulroney and the PCs had a parliamentary majority and easily passed the 1987 Canada–US FTA and NAFTA bills. However, Mulroney was replaced as Conservative leader and prime minister by . Campbell led the PC party into the 1993 election where they were decimated by the Liberal Party under Jean Chrétien, who campaigned on a promise to renegotiate or abrogate NAFTA. Chrétien subsequently negotiated two supplemental agreements with Bush, who had subverted the LACLabor Advisory Committee for Trade Negotiations and Trade Policy; established under the Trade Act of 1974. advisory process Preliminary Report of the Labor Advisory Committee for Trade Negotiations and Trade Policy on the North American Free Trade Agreement, dated Sept. 16, 1992 (Washington, D.C.: Executive Office of the President, Office of the U.S. Trade Representative, 1992), i, 1. and worked to "fast track" the signing prior to the end of his term, ran out of time and had to pass the required ratification and signing of the implementation law to incoming president .For an overview of the process, see , Mandate for Change', or Business as Usual", Z Magazine 6, no. 2 (February 1993), 41.

Before sending it to the United States Senate Clinton added two side agreements, the North American Agreement on Labor Cooperation (NAALC) and the North American Agreement on Environmental Cooperation (NAAEC), to protect workers and the environment, and to also allay the concerns of many House members. The U.S. required its partners to adhere to environmental practices and regulations similar to its own. After much consideration and emotional discussion, the U.S. House of Representatives passed the North American Free Trade Agreement Implementation Act on November 17, 1993, 234–200. The agreement's supporters included 132 Republicans and 102 Democrats. The bill passed the Senate on November 20, 1993, 61–38. Senate supporters were 34 Republicans and 27 Democrats. Clinton signed it into law on December 8, 1993; the agreement went into effect on January 1, 1994. Clinton, while signing the NAFTA bill, stated that "NAFTA means jobs. American jobs, and good-paying American jobs. If I didn't believe that, I wouldn't support this agreement." NAFTA then replaced the previous Canada-US FTA.


Provisions
The goal of NAFTA was to eliminate barriers to trade and investment between the U.S., Canada and Mexico. The implementation of NAFTA on January 1, 1994, brought the immediate elimination of on more than one-half of Mexico's to the U.S. and more than one-third of U.S. exports to Mexico. Within 10 years of the implementation of the agreement, all U.S.–Mexico tariffs were to be eliminated except for some U.S. agricultural exports to Mexico, to be phased out within 15 years.Floudas, Demetrius Andreas & Rojas, Luis Fernando; "Some Thoughts on NAFTA and Trade Integration in the American Continent", 52 (2000) International Problems 371 Most U.S.–Canada trade was already duty-free. NAFTA also sought to eliminate non- trade barriers and to protect the intellectual property rights on traded products.

Chapter 20 provides a procedure for the international resolution of disputes over the application and interpretation of NAFTA. It was modeled after Chapter 69 of the Canada–United States Free Trade Agreement. The roster of NAFTA adjudicators includes many retired judges, such as , John Maxwell Evans, , , Arlin M. Adams, Susan Getzendanner, George C. Pratt, Charles B. Renfrew and Sandra Day O'Connor.

NAFTA is, in part, implemented by Technical Working Groups composed of government officials from each of the three partner nations.


Intellectual property
The North American Free Trade Agreement Implementation Act made some changes to the copyright law of the United States, foreshadowing the Uruguay Round Agreements Act of 1994 by restoring (within the NAFTA nations) on certain motion pictures which had entered the .GPO, P.L. 103-182, Section 334 ML-497 (March 1995), Docket No. RM 93-13C, Library of Congress Copyright Office


Environment
U.S. congressional approval for NAFTA would have been impossible without addressing public concerns about NAFTA's environmental impact. The Clinton administration negotiated a side agreement on the environment with Canada and Mexico, the North American Agreement on Environmental Cooperation (NAAEC), which led to the creation of the Commission for Environmental Cooperation (CEC) in 1994. To alleviate concerns that NAFTA, the first regional trade agreement between a developing country and two developed countries, would have negative environmental impacts, the commission was mandated to conduct ongoing environmental assessment, It created one of the first ex post frameworks for environmental assessment of trade liberalization, designed to produce a body of evidence with respect to the initial about NAFTA and the environment, such as the concern that NAFTA would create a "race to the bottom" in environmental regulation among the three countries, or that NAFTA would pressure governments to increase their environmental protections. Analytic Framework for Assessing the Environmental Effects of the North American Free Trade Agreement. Commission for Environmental Cooperation (1999) The CEC has held four symposia to evaluate the environmental impacts of NAFTA and commissioned 47 papers on the subject from leading independent experts.


Agriculture
From the earliest negotiation, was – and still is – a controversial topic within NAFTA, as it has been with almost all free trade agreements signed within the WTO framework. Agriculture is the only section that was not negotiated trilaterally; instead, three separate agreements were signed between each pair of parties. The Canada–U.S. agreement contains significant restrictions and quotas on agricultural products (mainly sugar, dairy, and poultry products), whereas the Mexico–U.S. pact allows for a wider within a framework of phase-out periods (it was the first North–South FTA on agriculture to be signed).


Transportation infrastructure
NAFTA established the for road transport between Canada and Mexico, also proposed for use by rail, pipeline, and telecommunications infrastructure. This became a High Priority Corridor under the U.S. Intermodal Surface Transportation Efficiency Act of 1991.


Impact


Canada

Historical context
In 2008, Canadian to the United States and Mexico were at $381.3 billion, with at $245.1 billion. According to a 2004 article by University of Toronto economist , NAFTA produced a significant net benefit to Canada in 2003, with long-term increasing by up to 15 percent in industries that experienced the deepest cuts. While the contraction of low-productivity plants reduced (up to 12 percent of existing positions), these job losses lasted less than a decade; overall, unemployment in Canada has fallen since the passage of the act. Commenting on this , Trefler said that the critical question in is to understand "how freer trade can be implemented in an industrialized economy in a way that recognizes both the long-run gains and the short-term adjustment costs borne by workers and others".

A study in 2007 found that NAFTA had "a substantial impact on international trade volumes, but a modest effect on prices and welfare".

According to a 2012 study, with reduced NAFTA trade tariffs, trade with the United States and Mexico only increased by a modest 11% in Canada compared to an increase of 41% for the U.S. and 118% for Mexico. Moreover, the U.S. and Mexico benefited more from the tariff reductions component, with welfare increases of 0.08% and 1.31%, respectively, with Canada experiencing a decrease of 0.06%.


Current issues
According to a 2017 report by the New York City based public policy think tank report, Council on Foreign Relations (CFR), bilateral trade in agricultural products tripled in size from 1994 to 2017 and is considered to be one of the largest economic effects of NAFTA on U.S.-Canada trade with Canada becoming the U.S. agricultural sectors' leading importer. Canadian fears of losing manufacturing jobs to the United States did not materialize with manufacturing employment holding "steady". However, with Canada's labour productivity levels at 72% of U.S. levels, the hopes of closing the "productivity gap" between the two countries were also not realized.

According to a 2018 report, Canada's commitments under NAFTA and the conflict. The Paris commitments are voluntary, and NAFTA's are compulsory.

According to a 2018 report by Gordon Laxter published by the Council of Canadians, NAFTA’s Article 605, energy proportionality rule ensures that Americans have "virtually unlimited first access to most of Canada’s oil and natural gas" and Canada cannot reduce oil, natural gas and electricity exports (74% its oil and 52% its natural gas) to the U.S., even if Canada is experiencing shortages. These provisions that seemed logical when NAFTA was signed in 1993 are no longer appropriate. The Council of Canadians promotes environmental protection and is against NAFTA's role in encouraging development of the and .

Donald Trump, angered by their unrealistic dairy tax of "almost 300%", plans to leave Canada out of the NAFTA. Since 1972, Canada has been operating on a "supply management" system, which the United States is attempting to pressure it out of, specifically focusing on the dairy industry. However, this has not yet taken place, as Quebec, which holds approximately half the country's dairy farms, still supports supply management.


Mexico
(Mexican assembly plants that take in imported components and produce for export) have become the landmark of trade in Mexico. They moved to Mexico from the United States, hence the debate over the loss of American jobs. Income in the maquiladora sector has increased 15.5% since the implementation of NAFTA in 1994. Other sectors now benefit from the free trade agreement, and the share of to the U.S. from non-border states has increased in the last five years while the share of exports from border states has decreased. This has allowed rapid growth in non-border metropolitan areas such as , León and Puebla; all larger in population than , Ciudad Juárez, and .

The overall effect of the Mexico–U.S. agricultural agreement is disputed. Mexico did not invest in the necessary for competition, such as efficient railroads and highways.This resulted in more difficult living conditions for the country's poor. Mexico's agricultural exports increased 9.4 percent annually between 1994 and 2001, while imports increased by only 6.9 percent a year during the same period. Greening the Americas, Carolyn L. Deere (editor). MIT Press, Cambridge, Massachusetts

One of the most affected agricultural sectors is the . Mexico went from a small player in the pre-1994 U.S. export market to the second largest importer of U.S. agricultural products in 2004, and NAFTA may be a major catalyst for this change. Free trade removed the hurdles that impeded business between the two countries, so Mexico has provided a growing market for meat for the U.S., and increased sales and profits for the U.S. meat industry. A coinciding noticeable increase in the Mexican per capita GDP greatly changed meat consumption patterns; per capita meat consumption has grown.

Production of in Mexico has increased since NAFTA. But internal for corn has increased beyond Mexico's supply, and imports have become needed, far beyond the quotas Mexico originally negotiated.  p. 4 Zahniser & Coyle also point out that corn prices in Mexico, adjusted for international prices, have drastically decreased, but through a program of expanded by former president , production has remained stable since 2000.Steven S. Zahniser & William T. Coyle, U.S.-Mexico Corn Trade During the NAFTA Era: New Twists to an Old Story Https://www.nytimes.com/2003/08/27/business/us-corn-subsidies-said-to-damage-mexico.html< /ref>

A 2001 Journal of Economic Perspectives review of the existing literature found that NAFTA was a net benefit to Mexico. By the year 2003, 80% of the commerce in Mexico was executed only with the U.S. The commercial sales surplus, combined with the deficit with the rest of the world, created a dependency in Mexico's exports. These effects were evident in 2001–2003; the result of that was either a low rate or a negative rate in Mexico's exports.Ruiz Nápoles, Pablo. "El TLCAN y el balance comercial en México". Economía Informa. UNAM. 2003

A 2015 study found that Mexico's welfare increased by 1.31% as a result of the NAFTA tariff reductions, and that Mexico's intra-bloc trade increased by 118%. Inequality and fell in the most -affected regions of Mexico. 2013 and 2015 studies show that Mexican small farmers benefitted more from NAFTA than large-scale farmers.

NAFTA has also been credited with the rise of the Mexican . A study found that NAFTA lowered the average cost of basic necessities in Mexico by up to 50%. This price reduction increased cash-on-hand for many Mexican families, allowing Mexico to graduate more engineers than Germany each year.

Growth in new sales orders indicates an increase in demand for manufactured products, which resulted in expansion of production and a higher to satisfy the increment in the demand. The growth in the maquiladora industry and in the manufacturing industry was of 4.7% in August 2016."Economic Report of the exportations in the manufacturer industry" Consejo Nacional de Industria Maquiladora Manufacturera A.C. 2016 Three quarters of the imports and exports comes are with the U.S.

political scientist Daniel W. Drezner has argued that NAFTA made it easier for Mexico to transform to a real democracy and become a country that views itself as North American. This has boosted cooperation between the United States and Mexico.


United States
Many economists consider that NAFTA was beneficial for the United States. In a 2012 survey of leading economists, 95% said that on average U.S. citizens benefited from NAFTA. A 2001 Journal of Economic Perspectives review found that NAFTA was a net benefit to the United States. A 2015 study found that US welfare increased by 0.08% as a result of NAFTA tariff reductions, and that US intra-bloc trade increased by 41%.

A 2014 study on the effects of NAFTA on US trade jobs and investment found that between 1993 and 2013, the US trade deficit with Mexico and Canada increased from $17.0 to $177.2 billion, displacing 851,700 US jobs.

In 2015, the Congressional Research Service concluded that the "net overall effect of NAFTA on the US economy appears to have been relatively modest, primarily because trade with Canada and Mexico accounts for a small percentage of US . However, there were worker and firm adjustment costs as the three countries adjusted to more open trade and investment among their economies." The report also estimated that NAFTA added $80 billion to the US economy since its implementation, equivalent to a 0.5% increase in US GDP.

The US Chamber of Commerce credits NAFTA with increasing U.S. trade in goods and services with Canada and Mexico from $337 billion in 1993 to $1.2 trillion in 2011, while the AFL–CIO blames the agreement for sending 700,000 American manufacturing jobs to Mexico over that time.

University of California, San Diego economics professor has said that NAFTA helped the US compete against China and therefore saved US jobs. While some jobs were lost to Mexico as a result of NAFTA, considerably more would have been lost to China if not for NAFTA.


Trade balances
The US had a with NAFTA countries of $28.3 billion for services in 2009 and a of $94.6 billion (36.4% annual increase) for goods in 2010. This trade deficit accounted for 26.8% of all US goods trade deficit. A 2018 study of global trade published by the Center for International Relations identified irregularities in the patterns of trade of NAFTA ecosystem using analytical techniques. The study showed that the US trade balance is influenced by tax avoidance opportunities provided in .

A study published in the August 2008 issue of the American Journal of Agricultural Economics, found NAFTA increased US agricultural exports to Mexico and Canada, even though most of the increase occurred a decade after its ratification. The study focused on the effects that gradual "phase-in" periods in regional trade agreements, including NAFTA, have on . Most of the increase in members' agricultural trade, which was only recently brought under the purview of the World Trade Organization, was due to very high trade barriers before NAFTA or other regional trade agreements. "Free Trade Agreement Helped U.S. Farmers". Newswise. Retrieved on June 12, 2008.


Investment
The U.S. foreign direct investment (FDI) in NAFTA countries (stock) was $327.5 billion in 2009 (latest data available), up 8.8% from 2008. The US direct investment in NAFTA countries is in nonbank holding companies, and in the manufacturing, /, and sectors. The foreign direct investment of Canada and Mexico in the United States (stock) was $237.2 billion in 2009 (the latest data available), up 16.5% from 2008.


Economy and jobs
In their May 24, 2017 report, the Congressional Research Service (CRS) wrote that the economic impacts of NAFTA on the U.S. economy were modest. In a 2015 report, the Congressional Research Service summarized multiple studies as follows: "In reality, NAFTA did not cause the huge job losses feared by the critics or the large economic gains predicted by supporters. The net overall effect of NAFTA on the U.S. economy appears to have been relatively modest, primarily because trade with Canada and Mexico accounts for a small percentage of U.S. GDP. However, there were worker and firm adjustment costs as the three countries adjusted to more open trade and investment among their economies."

Many American small businesses depend on exporting their products to Canada or Mexico under NAFTA. According to the U.S. Trade Representative, this trade supports over 140,000 small- and medium-sized businesses in the US.

According to University of California Berkeley professor of economics Brad DeLong, NAFTA had an insignificant impact on US manufacturing. The adverse impact on manufacturing has been exaggerated in US political discourse according to DeLong, and Harvard economist .

According to a 2013 article by Jeff Faux published by the Economic Policy Institute, , , and other states with high concentrations of manufacturing jobs were most affected by job loss due to NAFTA. According to a 2011 article by EPI economist Robert Scott about 682,900 U.S. jobs were "lost or displaced" as a result of the trade agreement.

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