Analysis of the North American Free Trade Act

Analysis of the North American Free Trade Act

Analysis of the North American Free Trade Act (NAFTA)

The North American Free Trade Act (NAFTA) has been in place in the United States, Canada, and Mexico for more than three years, having been enacted with many loud and vocal concerns expressed by both the Congress and the media (When neighbours embrace…, 1997). NAFTA has been called, rightly so, the most comprehensive trade relationship ever negotiated among friendly countries. NAFTA also will go down in economic history as the first time a developing country has agreed to become a trading partner and opening up its economy to full competition with those countries (Hirsch, 1995).

This analysis will deal with three separate aspects of NAFTA. The first section will look at the history of NAFTA, providing a brief overview of the events leading up to the treaty, including some major tenets of that treaty. The second section will deal with the current state of relations between the trading partners. Section three presents the outlook for the future, looking at some of the challenges facing the NAFTA partners.

The NAFTA agreement came as the result of many years of confusing trade policies that followed World War II. Immediately after that war, the U.S. sent hundreds of billions of dollars in foreign aid and bank loans to Europe, Asia, Africa, Latin America, then threw open U.S. markets to let their products in. That attitude was not returned and an era of protectionism developed in our Asian and European trading partners. In response, the United States, Canada and Mexico began discussing the possibilities of a trade pact that would be similar to that proposed for the European Common Market. The best way to summarize this complex socio-economic history is to let the primary evidence be the objectives of the NAFTA proposal.

The act’s guiding objectives state that NAFTA would endeavor:

* to eliminate barriers to trade in, and facilitate the cross-border movemen…

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