The North American Free Trade Agreement Is An Agreement Among North American Countries

One of the most controversial aspects of NAFTA is the agricultural sector in Mexico and the perception that NAFTA has resulted in a higher number of displacements of Mexican workers in this sector than in other sectors of the economy. Many critics of NAFTA say the agreement has resulted in a large number of job losses in Mexican agriculture, particularly in the maize sector. One study estimates that these losses were more than one million jobs lost in maize production between 1991 and 2000.67 While some of the changes in the agricultural sector are a direct consequence of NAFTA when Mexico began importing cheaper products from the United States, many of the changes to Mexico`s unilateral agricultural reforms in the 1980s and early 1990s are due. Most domestic policy reforms have involved privatization efforts and have led to increased competition. These measures include the abolition of agricultural-related so-E enterprises and the abolition of basic price subsidies and subsidies.68 These reforms coincided with the NAFTA negotiations and continued beyond the implementation of NAFTA in 1994. Unilateral reforms in the agricultural sector make it difficult to separate these effects from the effects of NAFTA. Most of the trade effects of NAFTA can be attributed to changes in the trade and investment model with Mexico, as economic integration between Canada and the United States has already taken place. As noted above, while NAFTA has been able to accelerate U.S.-Mexico trade since 1993, other factors, such as economic growth, have also had an impact on trade. As trade tends to improve during economic growth cycles, it tends to improve with lower growth. For example, the economic downturns of 2001 and 2009 likely played a role in the decline in U.S.

exports to and imports from Canada and Mexico, as shown in Chart 2. After U.S. President Donald Trump took office in January 2017, he tried to replace NAFTA with a new agreement and began negotiations with Canada and Mexico. In September 2018, the United States, Mexico and Canada reached an agreement to replace NAFTA with the U.S.-Mexico-Canada Agreement (USMCA), and the three countries had ratified it until March 2020. Nafta remained in effect until the implementation of the USMCA. [13] In April 2020, Canada and Mexico informed the United States that they were ready to implement the agreement. [14] The USMCA came into force on July 1, 2020 and replaced NAFTA. Many economists and business representatives generally want to maintain trade relations with Canada and Mexico under NAFTA in order to improve general relations and economic integration within the region. However, labor groups and some consumer advocates say the deal has led to outsourcing and lower wages, which has had a negative impact on the U.S. economy. Some proponents and critics of NAFTA agree that the three countries may want to look at what the agreement did not do by looking at the future of North American trade and economic relations.

The policy could include updating or “modernizing” provisions to include commitments in recent U.S. trade agreements. According to a World Bank study, NAFTA has brought economic and social benefits to the Mexican economy, but that it is not enough to reduce inequality in economic conditions between Mexico and the United States73.73 Mexico needs to invest more in education, innovation and infrastructure, as well as in the quality of national institutions. The study also finds that income convergence between a Latin American country and the United States is limited by large differences in the quality of national institutions, in the innovation dynamics of domestic firms and in the skills of the workforce.