What Was The Controversy Surrounding The North American Free Trade Agreement (Nafta)

15 Apr

Notes: Data on U.S. exports to Canada are deed from import data collected by Canada. The use of Canadian import data to data on U.S. exports requires several adjustments to compare the two series. Total exports to the United States are slightly higher. U.S. Census Bureau, “U.S./Canada Data Exchange and Substitution,” The free trade agreement was concluded in 1988 and NAFTA extended most of the provisions of the free trade agreement to Mexico. NAFTA was negotiated by the governments of U.S.

President George H.W. Bush, Canadian Prime Minister Brian Mulroney and Mexican Prime Minister Carlos Salinas de Gortari. An interim agreement on the pact was reached in August 1992 and signed by the three heads of state and government on 17 December. NAFTA was ratified by the national parliaments of the three countries in 1993 and came into force on January 1, 1994. The Canada-U.S. agreement eliminated tariffs on cars, trucks, buses, tires and auto parts between the two countries. NAFTA has effectively replaced that agreement. Mexico`s first steps towards opening up its closed economy focused on reforming its import substitution policy in the mid-1980s. Other reforms were undertaken in 1986, when Mexico became a member of the General Agreement on Tariffs and Trade (GATT).

Mexico, for example, has agreed, as a precondition for GATT membership, to reduce its maximum rates to 50%. Mexico went further by lowering its highest tariff from 100% to 20%. Mexico`s average market price rose from 25% in 1985 to about 19% in 1989.6 NAFTA services provisions established a number of rules and commitments in the exchange of services between countries. The agreement expanded the provisions of the U.S.-Canada Free Trade Agreement and, in the multilateral trade negotiations of the Uruguay Round, with a view to creating internationally agreed disciplines for national regulation of trade in services26.26 The agreement granted service providers certain rights in terms of non-discriminatory treatment, cross-border sales and entry, investment and access to information. However, there have been some exclusions and reservations from each country. These included shipping (U.S.), film and publishing (Canada) and oil and gas drilling (Mexico)27 Although NAFTA liberalizes some service sectors in Mexico, in particular financial services, which have profoundly changed its banking sector, other sectors have been hardly affected.28 With regard to telecommunications services, NAFTA partners have agreed to exclude the provision of basic services, but not use. NAFTA has granted telecommunications service providers and users a “Bill of Rights,” including access to public telecommunications services; connection to private lines reflecting economic costs and based on flat-rate prices; 29 However, NAFTA did not require the parties to authorize a person from another NAFTA country to provide or operate telecommunications networks or services.

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