The North American Free Trade Area (NAFTA) is a free trade agreement between Canada, the United States and Mexico, based on the model of the European Community (European Union).
The first step was the Abbott Plan, adopted in 1947, which aimed to stimulate US investment in key sectors of the Canadian economy. In 1959, the United States and Canada entered into a joint defense production agreement that promoted American standards in Canadian military production.
The next step was the conclusion of an agreement in 1965 on the liberalization of trade in automotive products, which contributed to the integration of many other industries. The idea of a trade and political unification of the United States, Canada and Mexico began to be implemented in the 1970s. At first there was talk of formalizing an energy union. A similar idea was supported in the 1980s by Presidents R. Reagan and G. Bush.
In September 1988, after difficult three years of negotiations, the US-Canada Free Trade Agreement (CUSFTA) was signed, according to which a free trade area was to be formed between the US and Canada within ten years.
Due to the integration processes that took place in Europe and Asia in the 1980s, the issue of creating NAFTA became more acute, as it became clear that the answer to the unification of Europe should be the unification of America, and, as part of it, North America. However, from the very beginning, Mexico, Canada and the United States viewed the meaning and potential of NAFTA from different perspectives.
The agreement establishing the North American Free Trade Association (NAFTA) came into force on January 1, 1994, preserving and reaffirming the 1988 Canada-United States Free Trade Agreement (CUSFTA).
NAFTA currently represents the world's largest regional free trade area, with a population of 406 million and a combined gross domestic product of $10.3 trillion. The North American Free Trade Agreement contains a set of agreements that extend beyond trade to services and investment, and for the first time brings together industrialized countries and a developing country. The creation of a free trade zone in the North American region was due to a number of factors:
The main goal of NAFTA was to remove barriers to trade in goods between participating countries. Half of the barrier restrictions were lifted immediately, the rest were removed gradually over 14 years. This agreement was an expansion of the 1989 trade agreement between Canada and the United States.
Unlike the European Union, NAFTA did not aim to create interstate administrative bodies, nor did it create laws that would govern such a system. NAFTA is only an international trade agreement within the framework of international law. To date, NAFTA's goals include:
NAFTA has a clear organizational structure. The central institution of NAFTA is the Free Trade Commission, which includes representatives at the trade minister level from the three participating countries. The Commission oversees the implementation and further development of the Agreement and helps resolve disputes arising in the interpretation of the Agreement. She also oversees the work of more than 30 NAFTA committees and working groups. The last meetings of the Commission were held in Washington, USA in 1997 and in Mexico City in early 1998.
The ministers agreed that the Commission would be assisted in its work by the NAFTA Coordinating Secretariat (NCS), which was planned to be established at the end of 1997 in Mexico City. The Secretariat is intended to serve as the official archive of the work of NAFTA and serve as the working secretariat for the Commission.
NAFTA provides for further work to help achieve the creation of a free trade area. In accordance with the Agreement, in order to promote trade and investment. To ensure the effective implementation of NAFTA regulations and their administration, more than 30 working groups and committees were created. The main areas in which normative work is being undertaken include the origin of goods, customs, agricultural trade and subsidies to this area of the economy, product standardization, government procurement and the movement of people across borders. These working groups and committees report annually to the NAFTA Commission.
NAFTA working groups and committees also help make NAFTA's implementation process smoother and provide a forum for exploring ways to further liberalize trade among participating countries. An example is Canada's consistent policy aimed at accelerating tariff reductions on certain types of goods. In addition, NAFTA working groups and committees provide an arena for discussion of controversial issues, free from politics, and, by discussing issues at an early stage of their development, help avoid dispute resolution procedures.
Currently, most trade carried out in North America, occurs in accordance with the clear, precise and well-established norms of NAFTA and the World Trade Organization (WTO). However, despite this, controversial issues invariably arise in the field of trade of this scale. Whenever similar situations NAFTA advocates amicable resolution of the dispute by the affected states through NAFTA committees and working groups or other advisory bodies. If a mutually acceptable solution is not found, NAFTA provides for a prompt and effective consideration of the problem by a group of experts.
The administration of NAFTA's dispute resolution provisions is the responsibility of the Canadian, American and Mexican national sections of the NAFTA Secretariat. In the first nine months of 1996 - 97 financial year The Secretariat ordered 14 panel reviews under Chapter 19 of the Agreement and one arbitration review under Chapter 20. In 1996, eight Chapter 19 panel decisions and one Chapter 20 panel report were issued.
Chapter Twenty of the North American Free Trade Agreement establishes an institutional mechanism and dispute resolution procedure. By the end of 1996, 11 consultations had been requested under this chapter in 10 cases, one of which had been referred to arbitration. Chapter fourteen further sets out special procedures for resolving any disputes relating to financial services.
Based on the Canada-U.S. Free Trade Agreement (FTA), NAFTA includes (in Chapter 19) a unique system of review by experts representing two countries of national decisions on antidumping and countervailing duty issues, thereby replacing legal review by each of the three countries . Since the adoption of NAFTA, there have already been 73 requests for consideration of the issue by a group of experts, in accordance with Chapter 19 of the Agreement.
With regard to the resolution of investment-related issues, NAFTA uses "mixed" arbitration procedures between the injured investor and the government concerned, based on the general procedures established by the Canadian Foreign Investment Protection Agreements and the World Banking Center for Investment Disputes Resolution . NAFTA also requires national agencies to respect the principles of fairness and transparency.
National sections of NAFTA are also responsible for resolving disputes under other free trade agreements concluded by these countries outside NAFTA. Thus, back in 1997, the Canadian section of the NAFTA Secretariat was given responsibility for administering the dispute resolution process under Chapter 8 of the Canada-Israel Free Trade Agreement, and the same responsibility under the Canada-Chile Free Trade Agreement.
The scale of the economic relationship between the United States, Canada and Mexico based on mutual trade and capital flows can be judged from the following data. About 75-80% of Canadian exports (20% of Canada's GDP) are sold in the United States. The US share in foreign direct investment in Canada is over 75% and Canada in the US is 9%. About 70% of Mexican exports go to the United States, and 65% of Mexican imports come from there. The US share of total foreign direct investment inflows into Mexico exceeds 60%. The US GDP is 14.5 times that of Canada and 19 times that of Mexico.
In terms of population, total gross product and a number of basic economic indicators, the North American integration group is comparable to the European Union. NAFTA has powerful (especially thanks to the United States) economic potential, for example, the annual production of goods and services by the United States, Canada and Mexico is equal to $5 trillion, and their share of world trade is almost 20%. The structure of the North American integration complex has its own characteristics compared to the European integration model.
The main difference is the asymmetrical economic dependence of the United States, Canada and Mexico. The interaction between the economic structures of Mexico and Canada is far inferior in depth and scale to Canadian-American and Mexican-American integration. Canada and Mexico are more likely to be competitors in the American market for goods and labor, rivals in attracting capital and technology from American corporations, than partners in the integration process.
Another feature of the North American economic grouping is that its participants are in different starting conditions. While Canada has managed to move closer to the United States in terms of the main economic macro indicators (GDP per capita, labor productivity) over the past decade, Mexico, which for many years has been in the position of an economically backward state with a large external debt, still lags noticeably behind these countries in terms of basic fundamentals. indicators.
The difference in GDP per capita between Mexico and the United States reaches 6.6 times, and with Canada – 4.1 times. Such a significant gap in levels economic development member countries makes it difficult to create a unified economic complex.
It is also worth noting that within NAFTA, unlike the EU and APEC, there is only one center of economic power - the United States, whose economy is several times larger than Canada and Mexico combined. This monocentricity makes governance easier (the leading country can easily impose its decisions on weaker partners), but at the same time creates an environment of potential conflicts (US partners may be dissatisfied with their subordinate position). Moreover, integration appears to be one-sided: Canada and Mexico are closely integrated with the United States, but not with each other.
However, the United States received significant benefits as a result of this agreement:
US participation in the regional integration process has become a powerful factor in the long-term positive impact on domestic economic development.
The total trade turnover with Mexico in 1993–1997 alone increased almost 2.5 times (from 80.5 billion dollars to 197 billion), with Canada - almost 2 times (from 197 to 364 billion). Both of these countries account for a third of US foreign trade. In the early 2000s, the average annual increase in trade turnover with Mexico was more than 20%, with Canada - 10%. Duty-free status has now extended to two-thirds of all US exports to the region, and these opportunities continue to expand. The United States needs such regional economic integration to improve its competitiveness vis-à-vis its major economic rivals, the EU and Japan.
| Countries | Population, million people | Size of real GDP, billion US dollars | GDP per capita, thousand US dollars | Inflation, % | Unemployment rate, % | Trade balance, billion US dollars |
| Canada | 34.8 | 1794.0 | 51.6 | 1.9 | 6.9 | 4.6 |
| Mexico | 120.3 | 1296.0 | 10.8 | 4.0 | 4.8 | -2.1 |
| USA | 318.9 | 17420.0 | 54.6 | 1.6 | 6.2 | -741.0 |
Source - CIA World Factbook
At the same time, various environmental and labor groups in the United States, as well as many members of the US Congress, fear the movement of American business activity to Mexico, with its low labor and environmental standards. In addition, Americans are afraid of the increasing flow of immigrants from Mexico since the 1990s, which in the 2000s already reached 300 thousand people a year. Such “Latin Americanization” of the United States seems to many Americans to be a threat to their civilization, based on the values of Protestant European culture.
For Mexico, membership in NAFTA means guaranteed access to the American market, which absorbs approx. 80% of all Mexican exports, increased influx of foreign investment. The desire for economic integration with the United States became the impetus for the neoliberal reforms undertaken by the Mexican government in the early 1980s, abandoning the import-substitution development strategy.
Through regional unification with the United States, Mexico began to gradually integrate into the global economy. Of particular importance to her was also the positive resolution of the issue of external debt after significant financial losses incurred in the 1980s: the Mexican government obtained large loans from the United States to implement free trade agreements. Many foreign companies began to move their activities to Mexico in order to penetrate the American and Canadian markets. Foreign direct investment in Mexico doubled between 1993 and 1999 alone.
Critics of Mexico's NAFTA membership point out that its benefits accrue almost exclusively to the elite, not to workers. Mexico's attractiveness to foreign entrepreneurs is largely due to its low standard of living (low wages) and low environmental standards. Therefore, the United States does not show much interest in improving the living standards of Mexicans.
Participation in NAFTA has turned Mexico into a program of trade liberalization and economic restructuring that makes future withdrawal difficult and a return to economic self-sufficiency virtually impossible.
Canada is an objectively stronger NAFTA member than Mexico, but weaker than the United States. Therefore, Canada is inclined to block with Mexico when defending its interests in order to put pressure on Washington. In the early 1990s, Canada relied on Mexico's support to counter US protectionist actions. In turn, Mexico received Canadian support in 1995 when it turned to the IMF and World Bank when there was a need for urgent intervention to save the Mexican peso.
Canada actively advocates expanding the free trade zone, considering Chile, as well as Colombia and Argentina, as the top candidates for joining the bloc. Demonstrating their independence and determination, the Canadians declared that they would not wait for the Americans, and in 1996 they entered into a bilateral free trade agreement with Chile modeled on NAFTA, as well as two additional agreements on labor relations and environmental protection, modeled on the corresponding tripartite agreements. 1993 between Canada, USA and Mexico. Canada has entered into agreements with many countries Latin America various bilateral agreements on certain issues of economic cooperation, persistently promotes the idea of integrating NAFTA with MERCOSUR. Canada has been very actively involved in the implementation of the plan to create the FTAA. In 1998, she began to chair the negotiations to conclude this agreement, which was declared a priority of Canadian policy in the region.
Thus, in just one decade, Canada has transformed from a rather passive observer to a full and active participant in multilateral processes and activities of the countries of the region. At the same time, Canadians act in their traditional role of mediator between countries with different levels of economic development and different ideological orientations.
Participation in CAFTA and NAFTA gave a strong boost to the Canadian economy: between 1989 and 2000 alone, the volume of Canadian exports more than doubled, the share of machinery and equipment in it increased from 28% in 1980 to 45% in 1999. This refutes the fears of those opponents of the free trade agreement. on the North American continent, who believed that it would lead to the “deindustrialization” of the Canadian economy.
In 2000, exports to the United States accounted for approximately 33% of Canada's total GDP, compared to 15% in 1989. The connection to the American market became especially strong in the two largest provinces of Canada in terms of population and economic potential - Ontario (the share of exports to the United States is 40% gross product) and in Quebec (24%).
) the most influential regional integration blocs in the modern world economy.
The core of NAFTA is US-Canadian economic integration. Developing since the 19th century, it led to the signing in September 1988 of the American-Canadian free trade agreement (Canada-U.S. Free Trade Agreement - CUSFTA), which came into force in 1989. KUFTA provided for the creation within 10 years of a free trade zone uniting both countries of North America. Since 1990, negotiations began on Mexico's accession to KUFTA. On December 17, 1992, the North American Free Trade Association (NAFTA) agreement was signed between the United States, Canada and Mexico, which came into force on January 1, 1994.
NAFTA became the world's first economic union that united highly developed countries (USA, Canada) and a developing country (Mexico).
Like other regional integration blocs, NAFTA was organized with the purpose of expansion of economic ties(primarily mutual trade) between the participating countries. By prohibiting member states from discriminating against mutual supplies of goods and investments, NAFTA establishes protectionist rules against external producers (in particular, textile industry and automotive industry).
The main goals of NAFTA, officially stated in the agreement establishing it, are:
– removing barriers to trade and promoting the free movement of goods and services between countries;
– establishing fair competition conditions within the free trade zone;
– a significant increase in investment opportunities in the member countries of the agreement;
– ensuring effective protection of intellectual property rights in each country;
– settlement of economic disputes;
– creating prospects for future multilateral regional cooperation.
Economic integration in North America differs from integration in Western Europe and Asia, which are based on the concerted regulatory activities of many highly developed countries.
In other regions, integration was carried out from the top down, with intergovernmental agreements stimulating business contacts different countries. In NAFTA, on the contrary, the integration process was underway « down up": at first high level intercorporate connections were achieved, and then interstate agreements were adopted on their basis.
Within NAFTA, unlike the EU and APEC, there is only one center of economic power - the United States, whose economy is several times larger than Canada and Mexico combined (Table). This monocentricity facilitates governance (the leading country can easily impose its decisions on weaker partners), but at the same time creates an environment of potential conflicts (US partners may be dissatisfied with their subordinate position). Moreover, integration appears to be one-sided: Canada and Mexico are closely integrated with the United States, but not with each other.
Due to its monocentricity, NAFTA does not have special supranational institutions (like the European Parliament in the EU), since they would only become an appendage to the US administration. The central organizing institution of NAFTA is the Free Trade Commission at the level of ministers of commerce, which monitors the implementation of the agreement and assists in resolving disputes arising from its interpretation. It oversees the activities of 30 committees and working groups. If any country decides to ignore the decisions of the Commission, it will face trade and other sanctions from other partners in the bloc.
Although NAFTA focuses primarily on trade liberalization (the reduction and eventual elimination of tariff and non-tariff barriers), it also covers a wide range of related issues. NAFTA adopted, in particular, agreements on environmental and labor cooperation - the North American Agreement on Environmental Cooperation (NAAEC - North American Agreement on Ecological Cooperation) and the North American Agreement on Labor Cooperation (NAALC - North American Agreement on Labor Cooperation).
NAFTA participants do not intend to transform it, as it was in the EU, into a customs union. This is because 70% of US foreign trade is with countries outside of NAFTA, so the United States wants to maintain freedom in its foreign economic policy.
In the 20th century The United States defended the principles of liberalization of world trade. NAFTA creates a precedent for liberal regulation of new areas not yet regulated under the GATT, such as investment, intellectual property rights, and trade in services. Therefore, it was the United States that initiated the conclusion of the North American Free Trade Agreement (NAFTA) with Canada and Mexico.
Since NAFTA demonstrates the effectiveness of regional cooperative ties, other Latin American countries and the regional associations existing here (MERCOSUR, Andean Pact, etc.) are negotiating the creation of an all-American integration union FTAA (Free Trade Agreement of the Americas - FTAA) on the basis of NAFTA. This idea is also supported by the United States, which seeks to strengthen pan-American economic integration to compete economically with Western Europe (the EU bloc) and East Asian countries (the APEC bloc).
At the initiative of Washington, the first meeting since 1967 of the heads of state and government of the two Americas (North and South) was organized in Miami in December 1994. It was during this summit that the United States put forward the idea of creating a single American free trade zone with the goal of eliminating all barriers to the development of trade in the Western Hemisphere by 2005. In 1995, another developing Latin American country, Chile, applied to join NAFTA. The US administration supported the plan for Chile to join NAFTA, but at the end of 1997 the US Congress blocked this plan, which weakened the US position on the eve of the second “Summit of the Americas”, held in April 1998 in Santiago (Chile). During this meeting, the leaders of 34 countries in the Western Hemisphere failed to reach an agreement on any practical measures; they agreed only on the need to negotiate on the creation of the FTAA.
US plans to expand NAFTA to the south are met with caution among Latin American countries. Brazil, Argentina and a number of other “newly industrialized” countries in Latin America are not satisfied with the model of economic relations within the framework of NAFTA between developed (USA, Canada) and developing (Mexico) countries. Although economic liberalization in NAFTA gave a strong impetus to the development of the Mexican economy, the growth of Mexican exports is largely due to “maquiladoras”, i.e. assembly plants - branches of American companies. In the structure of Mexican imports from the United States, components account for approximately 75%. This dependence does not allow the US Latin American partners to count on significant competitive advantages, develop complete technological production chains within the country and export final products. As a result, assembly export industries are relatively prosperous, but this creates an “enclave economy” and does not lead to a qualitative modernization of the economy as a whole.
The United States received significant benefits as a result of this agreement:
in the vast majority of industries, barriers against foreign manufacturers from NAFTA partner countries were gradually minimized, which made it possible to purchase many goods from them cheaper than in the United States itself;
American companies had much greater opportunities to access the markets of neighboring countries, which expanded the sales market.
US participation in the regional integration process has become a powerful factor in the long-term positive impact on domestic economic development.
The total trade turnover with Mexico in 1993–1997 alone increased almost 2.5 times (from 80.5 billion dollars to 197 billion), with Canada - almost 2 times (from 197 to 364 billion). Both of these countries account for a third of US foreign trade. In the early 2000s, the average annual increase in trade turnover with Mexico was more than 20%, with Canada - 10%. Duty-free status has now extended to two-thirds of all US exports to the region, and these opportunities continue to expand. The United States needs such regional economic integration to improve its competitiveness vis-à-vis its major economic rivals, the EU and Japan.
At the same time, various environmental and labor groups in the United States, as well as many members of the US Congress, fear the movement of American business activity to Mexico, with its low labor and environmental standards. In addition, Americans are afraid of the increasing flow of immigrants from Mexico since the 1990s, which in the 2000s already reached 300 thousand people a year. Such “Latin Americanization” of the United States seems to many Americans to be a threat to their civilization, based on the values of Protestant European culture.
For Mexico, membership in NAFTA means guaranteed access to the American market, which absorbs approx. 80% of all Mexican exports, increased influx of foreign investment. The desire for economic integration with the United States became the impetus for the neoliberal reforms undertaken by the Mexican government in the early 1980s, abandoning the import-substitution development strategy.
Through regional unification with the United States, Mexico began to gradually integrate into the global economy. Of particular importance to her was also the positive resolution of the issue of external debt after significant financial losses incurred in the 1980s: the Mexican government obtained large loans from the United States to implement free trade agreements. Many foreign companies began to move their activities to Mexico in order to penetrate the American and Canadian markets. Foreign direct investment in Mexico doubled between 1993 and 1999 alone.
Critics of Mexico's NAFTA membership point out that its benefits accrue almost exclusively to the elite, not to workers. Mexico's attractiveness to foreign entrepreneurs is largely due to its low standard of living (low wages) and low environmental standards. Therefore, the United States does not show much interest in improving the living standards of Mexicans.
Participation in NAFTA has turned Mexico into a program of trade liberalization and economic restructuring that makes future withdrawal difficult and a return to economic self-sufficiency virtually impossible.
Canada is an objectively stronger NAFTA member than Mexico, but weaker than the United States. Therefore, Canada is inclined to block with Mexico when defending its interests in order to put pressure on Washington. In the early 1990s, Canada relied on Mexico's support to counter US protectionist actions. In turn, Mexico received Canadian support in 1995 when it turned to the IMF and World Bank when there was a need for urgent intervention to save the Mexican peso.
Canada actively advocates expanding the free trade zone, considering Chile, as well as Colombia and Argentina, as the top candidates for joining the bloc. Demonstrating their independence and determination, the Canadians declared that they would not wait for the Americans, and in 1996 they entered into a bilateral free trade agreement with Chile modeled on NAFTA, as well as two additional agreements on labor relations and environmental protection, modeled on the corresponding tripartite agreements. 1993 between Canada, USA and Mexico. Canada has concluded various bilateral agreements with many Latin American countries on certain issues of economic cooperation, and persistently promotes the idea of integrating NAFTA with MERCOSUR. Canada has been very actively involved in the implementation of the plan to create the FTAA. In 1998, she began to chair the negotiations to conclude this agreement, which was declared a priority of Canadian policy in the region.
Thus, in just one decade, Canada has transformed from a rather passive observer to a full and active participant in multilateral processes and activities of the countries of the region. At the same time, Canadians act in their traditional role of mediator between countries with different levels of economic development and different ideological orientations.
Participation in CAFTA and NAFTA gave a strong boost to the Canadian economy: between 1989 and 2000 alone, the volume of Canadian exports more than doubled, the share of machinery and equipment in it increased from 28% in 1980 to 45% in 1999. This refutes the fears of those opponents of the free trade agreement. on the North American continent, who believed that it would lead to the “deindustrialization” of the Canadian economy.
In 2000, exports to the United States accounted for approximately 33% of Canada's total GDP, compared to 15% in 1989. The connection to the American market became especially strong in the two largest provinces of Canada in terms of population and economic potential - Ontario (the share of exports to the United States is 40% gross product) and in Quebec (24%).
With the emergence and development of NAFTA, the competitive struggle between the three world leaders - North America, Western Europe and Japan - intensified, but in a new configuration of these centers, with a new balance of forces.
Integration of countries into a common market is usually painful. Theoretically, the cost of such a reconstruction should be equally divided among all participants. In practice, however, Mexico bears a heavier burden than the United States and Canada because it started from a weaker economic position. While there is a compensatory financial mechanism in the EU, there is none in NAFTA.
Critics point to some of the negative consequences of NAFTA for highly developed member countries - in particular, the loss of jobs, especially in industrial areas. The loss of jobs in the United States is due to the fact that many American and multinational companies began to move production to Mexico. In fact, the largest employer in Mexico currently is the American corporation General Motors. Another example is the largest American jeans manufacturer Guess, which moved 2/3 of its production capacity from the United States to Mexico in the 1990s. The influx of cheap labor from Mexico into the North American labor market has a negative impact on growth wages in the USA and Canada.
Due to high dependence on the American market, the vulnerability of the economies of Canada and Mexico has increased. It manifests itself during periods of economic downturns in the United States, during fluctuations in its trade and political regime and in crisis situations, as happened, for example, after the terrorist attack on the United States on September 11, 2001.
Proponents of NAFTA point to significant increases in overall trade among all three countries. Thus, during the period 1993–2000, mutual trade turnover between the USA and Canada increased from 197 billion dollars to 408 billion dollars, trade turnover between the USA and Mexico - from 80.5 billion dollars to 247.6 billion. The volume of direct American investments in Canada and Mexico, exports of services from the United States (especially financial ones). The level of illegal immigration has decreased. American companies gained advantages over foreign competitors in “serving” the Canadian and Mexican markets.
Although NAFTA stimulates mutual trade, its short history also contains examples of trade “wars” when NAFTA members could not agree on measures to regulate trade. Thus, in 1996–1997 there was a “salmon war” between Canada and the USA, Mexico’s “apple war” against American exporters, and Mexico’s “tomato war” with the USA
Despite criticism, positive assessments of NAFTA's development prospects prevail. It is seen as the basis for broader integration of countries throughout the Western Hemisphere. The terms of NAFTA provide the opportunity for new states to join this organization and do not establish any geographical restrictions. In political terms, it is planned to create in the future a “community of democracies of the Western Hemisphere” - a kind of confederation of American countries with transparent borders and a single economy.
Dmitry Preobrazhensky, Yuri Latov
NAFTA has a clear organizational structure. The Free Trade Commission is the central institution of NAFTA. This body oversees the implementation and further development of the Agreement and helps resolve disputes that arise between countries. She also oversees the work of more than 30 NAFTA committees and working groups.
The trade ministers of the participating countries agreed that the Commission would be assisted by the NAFTA Coordinating Secretariat (NCS), the creation of which was planned for the end of 1997. The Secretariat is intended to serve as the official archive of NAFTA's work and serve as the Commission's working secretariat.
NAFTA provides for further work to help achieve the creation of a free trade area. In accordance with the Agreement, more than 30 working groups and committees were created to promote trade and investment, ensure the effective implementation of NAFTA regulations and their administration. The main areas in which normative work is being undertaken include the origin of goods, customs, agricultural trade and subsidies to this area of the economy, product standardization, government procurement and the movement of business people across borders. These working groups and committees report annually to the NAFTA Commission.
NAFTA working groups and committees also help smooth the implementation of the agreement and provide a forum for exploring ways to further reform trade among participating countries. In addition, NAFTA working groups and committees discuss controversial issues that have arisen between countries at an early stage of their development in order to avoid lengthy dispute resolution procedures.
Currently, most trade carried out in North America occurs under established standards NAFTA and the World Trade Organization (WTO). But still, controversial issues arise in the field of trade, while NAFTA advocates the friendly resolution of disputes between states whose interests are affected, through NAFTA committees and working groups or other bodies. NAFTA provides for a quick and effective review of the problem by a group of experts if the parties do not find a mutually beneficial solution to the problem.
Dispute resolution is the responsibility of the Canadian, American and Mexican national sections of the NAFTA Secretariat.
To resolve investment-related issues, NAFTA uses "mixed" arbitration procedures between the injured investor and the government concerned, based on the general procedures established by the Canadian Foreign Investment Protection Treaties and the World Banking Center for Investment Dispute Resolution.
The NAFTA agreement is NAFTA, North American Free Trade Agreement. This is the name of the integration economic association, whose members are Canada, the USA and Mexico. By its nature, this bloc is most similar to the European Union. NAFTA is a vital part of the modern world economy. Without it, the modern North American economy would not have developed.
The emergence of NAFTA was preceded by several important events. The first of them can be called the “Abbott Plan”. It appeared in 1947 and was intended to stimulate US investment in the Canadian economy. 12 years later, the neighboring countries entered into a new agreement regarding joint military production. Thanks to him, Canada adopted American standards in this area of the economy.
Then, in 1965, another trade liberalization treaty was adopted in the automobile industry. So, over and over again, new agreements were concluded between countries in ever new sectors of the economy. Mexico was gradually included in this process. In the 1980s integration touched the energy sector for the first time. American Presidents Ronald Reagan and George H. W. Bush actively contributed to the implementation of this agenda. NAFTA is the fruit of their efforts.
In 1988, CUSFTA, the Canada-US Free Trade Agreement, was adopted. According to the agreement, the countries were going to create a single integrated space within ten years. NAFTA is a direct development of the ideas of CUSFTA. This union was formed in parallel with similar unions in Europe. Thus, this was not a random political move by three countries, but part of an overall universal process.
The key date for the emergence of NAFTA was October 7, 1992. On that day, the corresponding agreement was signed by the presidents of Mexico and the United States, as well as the Prime Minister of Canada. As the parties agreed, the NAFTA free trade area appeared in January 1994.
What exactly did NAFTA lead to? The establishment of the union made it possible to remove barriers to trade and more effectively promote the free exchange of services and goods between the three countries. Fair competition conditions were established within the North American zone. Investment opportunities have also expanded.
The North American Free Trade Agreement NAFTA promoted the protection of intellectual property rights. Foreign economic relations of the USA, Canada and Mexico have undergone liberalization. Over the course of several years, almost all investment and trade obstacles that hampered the development of economic ties between neighbors were eliminated.
Immediately after the advent of NAFTA, North American states reduced tariffs on trade in food and industrial goods. Then a course was set for a complete refusal of customs payments. They disappeared from Canada-US trade in 1998, and from trade with Mexico in 2003.
Already in 1994, the first projects to expand the union arose. Many economists and politicians believed that NAFTA was an organization on the same path as Chile. Official negotiations on the South American country's entry into the free trade zone began in the summer of 1995. This idea immediately gained both opponents and supporters.
The Latin American state itself has repeatedly demonstrated a serious desire to join NAFTA. Thus, tariffs were significantly reduced in Chile. The fall stopped at 15%. In 1997, Santiago and Ottawa completed negotiations, which resulted in the signing of an agreement on cooperation in the field of environment and labor protection. It was believed that such a step would be a prelude to Chile’s entry into NAFTA. However, this never happened. The organization remained exclusively North American.
The United States received significant benefits as a result of NAFTA. In many industries, a situation has arisen where it has become even more profitable for the United States to purchase goods abroad than in the country itself. Statistics are also indicative. For example, in the Canadian province of Ontario, the share of exports to the neighboring country amounted to 40% of its own gross product, and in Quebec - 24%.
The North American Free Trade Agreement (NAFTA) has expanded the market for American companies. The supply of semi-finished products and materials from Mexico and Canada to the United States has become significantly more stable. American corporations reduced their own production costs because they were able to use cheap and available labor.
In general, the United States has noticeably strengthened its competitive position, and its internal economic development has had a long-term positive impact. In 1993-1997 Trade turnover with Mexico increased 2.5 times, and with Canada - 2 times. Today, approximately one-third of American foreign trade is with these two countries. Duty-free status has already extended to 2/3 of all US exports in this region. Thanks to the transformations of the 90s, the countries included in NAFTA significantly increased their competitiveness in relation to Japan and the European Union.
What did the North American Free Trade Agreement NAFTA do for Mexico? The 1992 treaty facilitated its integration into the global economy. The issue of external debt, which caused the country to suffer serious financial losses in the 1980s, was also resolved. The free trade agreement required significant funds. The Mexican government was able to obtain large loans from the United States for their implementation. The country's market became a launching pad for many foreign investors who wanted to later enter the States or Canada. The influx of foreign capital into Mexico in the 1990s. doubled.
Opponents of Mexico's entry into NAFTA argue that the benefits of the agreement are limited to a small elite, while ordinary workers have seen few benefits from membership in the union. The country maintains relatively low wages. Foreign investors are rushing there largely for this reason, since low personnel costs yield large profits.
Also, Mexican opponents of NAFTA believe that by joining the union, the country has become even more dependent on the States. Thus, a possible departure from the established policy of restructuring and liberalization will prove difficult, and a return to economic independence will be completely impossible.
When Canada joined NAFTA, it had very specific goals. The priority goal was to expand opportunities for companies to enter the American market. Canadian exporters were going to strengthen their own export capabilities and gain unlimited access to Mexico for their capital. The Latin American country was and is perfectly suited for bringing labor-intensive industries there.
Ottawa also bet that a strong US economy would help with structural reforms in Canada itself. The country's social and financial development has indeed accelerated. In NAFTA, Canada is more prominent than Mexico, but less prominent than the United States. Therefore, the United States' neighbors often come out with joint points of view, thus defending their interests before Washington. Similar incidents were repeated several times in the 1990s. Mexico received support from Canada when the Mexican peso threatened to collapse.
Of course, the North American Free Trade Area also has its downsides. There have been job losses in the US (and to a lesser extent in Canada). It was caused by the transfer of part of the production to Mexican jurisdiction. This circumstance had a noticeable impact on employment in many US industries. Chemical and textile production, as well as the automotive industry, were hit the hardest.
The largest American corporations have moved their production to Mexico: General Motors, Chrysler, Hess, etc. This policy is opposed by trade unions, which periodically organize mass actions throughout the country. Expanding trade turnover between Canada, the USA and Mexico, as well as growing imports of American goods from neighboring countries lead to an increase in the US trade deficit.
For the States, with the emergence of NAFTA, it is not better side The situation on the agricultural goods market has changed. Mexican competition has intensified in this industry. This pattern is especially noticeable in the example of bananas, tomatoes and citrus crops. Increasing supplies of agricultural products from Mexico requires modernization of control over the quality of goods. This is also due to the fact that in a Latin American country agriculture Pesticides banned in the USA are used.
NAFTA is the North American Free Trade Area, which is an agreement between countries such as America, Canada and Mexico. A single market zone was formed on the territory of these states. The agreement between the states was signed by its heads in 1994. In accordance with the terms of the agreement, the countries that are part of the association committed themselves to completely eliminating both customs and passport barriers in the next decade. Agreements were also reached on establishing rules for the formation of fair competition and creating the necessary conditions for the free movement of services with capital.
From a legal point of view, NAFTA is a modernized US-Canadian free trade agreement that was signed in 1988. If we consider the agreement between countries as a political phenomenon, then it appears in the format of America’s reaction to the procedure, including in education, that took place in 1992.
NAFTA supports a model orientation in the aspect The difference lies in the lack of desire for the formation of political supranational bodies. This is due to the developed differentiation of countries: America and Canada are highly developed regions, and Mexico is an actively developing area. NAFTA differs significantly from the EU in terms of the number of countries, but significantly exceeds it not only in terms of GDP, but also in terms of population. We can conclude that NAFTA is the world's largest economic association.
Thanks to cooperation, NAFTA member countries intensified trade and economic relations, while not only new development paths opened up, but a whole series of restrictions appeared. America partially transferred to Mexico industrial production, began to import a wide range of goods from this state for more than low prices in comparison with imports of similar goods from America.
At the same time, activity in the US labor market increased as capacity flowed to Mexico. The problem of deflation has intensified. Doors to the markets of the United States and other developed countries have opened for Mexico, the volume of foreign investment has increased, including the volume of lending to the state economy.
As for economic dividends, they were one-sided for a developing country. Only the elite felt the enrichment. Canada fits most harmoniously into the structure of the association. It managed to avoid large-scale deindustrialization while increasing industrial exports. Canada's main role was to act as a mediator between America and Latin American states.
An exclusive economic zone is essentially a set of agreements that extends not only to services and investment, but also covers the association. The provisions of the agreements regarding business activities in North America include:
The exclusive economic zone imposed certain restrictions on the participating countries. Thus, America, Canada and Mexico are obliged to maintain their national customs tariffs in terms of trade with third countries.
The free circulation of goods has been approved after transition period at 10 years (sometimes 15 years) in the economic unification zone. The rule applies to products identified as originating in the United States, Mexico and Canada. The agreement provides for improving the terms of trade in services and establishing a mechanism for mutual investment.
The agreement contains provisions for the temporary restoration of protection for those who have suffered losses as a result of the import of certain categories of goods. The NAFTA countries listed above must follow specific exceptions to the general free trade regime.
Against the backdrop of the creation of the zone, there are moments that do not meet the standard of the agreement. Thus, within the framework of NAFTA (North American Free Trade Area), the following standards continue to apply:
All products within the framework of cooperation are divided into three categories. This is an industrial group (excluding textile products), an agricultural group and a textile group including clothing. Each category of goods has its own individual tariff reduction schedule. It is worth mentioning the complete removal of duties on various groups of products. In the future, the NAFTA unification sets much more significant goals. Within 5-15 years it is planned to completely abolish most of the duties.
Within the framework of the NAFTA association, the participating countries of which were listed above, there are 5 dominant principles for the protection of foreign investors and their capital. This:
The agreement provides for legal liability for infringement of patents, trademarks and intellectual property. There is legislation that allows you to determine the area of production of a product. Thus, the product is assigned to the state in whose territory it was subjected to the greatest processing (calculated as a percentage).
NAFTA is a massive regional free trade area with a population of approximately 406 million people and a combined GDP of $10.3 trillion. The formation of the tandem was determined by a number of parameters and a list of goals that were planned to be achieved. The prerequisites for creating an association include the following:
It is quite clear for what reasons NAFTA was formed. The participating countries, when signing the agreement, in addition to the effectiveness of the partnership, also pursued a number of goals. This is the activation of trade by eliminating any restrictions, creating a healthy competitive environment, attracting investment, and ensuring a high level of intellectual property protection. The association continues to develop today, constantly expanding the scope of its influence.
