NAFTA

The North American Free Trade Agreement, known usually as NAFTA, is comprehensive trade agreement linking Canada, the U.S.A., and Mexico in a free trade sphere. Unlike the European Union, NAFTA does not create a set of supranational governmental bodies, nor does it create a body of law which is superior to national law. NAFTA went into effect on January 1, 1994. See: anti-globalization movement. NAFTA, as an international agreement, is very similar to a treaty. Under United States law it is classed as a congressional-executive agreement. See also Free Trade Area of the Americas.

Effects

NAFTA has been controversial since it was first proposed. Transnational corporations have tended to support NAFTA in the belief that lower tariffs would increase trade potential. Labor unions in the United States have opposed NAFTA for fear that jobs would move out of the country due to lower wage costs in Mexico. Farmers in Mexico have opposed NAFTA because the heavy agriculture subsidies for farmers in the United States have put a great deal of downward pressure on Mexican agricultural prices, forcing many out of business. Opposition to NAFTA also comes from environmental, social justice, and other advocacy organizations that believe NAFTA has detrimental non-economic impacts to health, environment, etc.

Since NAFTA was signed, it has been difficult to analyze its macroeconomic effects due to the large number of other variables in the global economy. Various economic studies have generally indicated that rather than creating an actual increase in trade, NAFTA has caused trade diversion, in which the NAFTA members now import more from each other at the expense of other countries worldwide.

See also

• Free Trade Area of the Americas
• maquiladora
• anti-globalization movement
• list of international trade topics

External link

• NAFTA Secretariat website