The Sunnyside of NAFTA

Trade Flow Trends Trade flows between the U.S. and its NAFTA partners increased significantly in the 1990’s. It’s impossible to say how much NAFTA has influenced this due to the growing trend before NAFTA implementation. NAFTA facilitated the trade growth.

Important Features of NAFTA Most forms of trade barriers came tumbling down. Tariffs fell from an average of 27% to 13.1% since NAFTA. It specifies North American content requirements for goods that are subject to free trade…it must be made in North America in order to qualify.

Another important feature… NAFTA establishes in itself a system of dispute resolution. When a disagreement arises, any country may request an investigation. This sets forth a bi-national panel that investigates the issue and makes a report. Both countries are bound by the results of their analysis.

Careful Analysis shows… That the impact of NAFTA on the net job creation in the U.S. has been small, but positive. That the growth in trade between all three NAFTA partners is a positive indicator of increasing specialization, economies of scale, and efficiency. That Mexico has become the Latin leader of the world in trade implementation and mutual problem solving.

Solutions… While the formal rules of contact between cities and states in separate nations have not changed, NAFTA and the changes it represents have stimulated both U.S. and Mexican citizens to search for new institutional and organizational structures. The result has been a flowering of border-based local governmental, business, civic, and grassroots organizations that are creating new solutions to transboundary problems of water pollution, air quality, civic education, infrastructure development, and others.

NAFTA lends a helping hand. The Mexican recession of 1995 was severe, but short. It is likely that NAFTA played a positive role in helping Mexico to escape recession through increased exports. U.S. exports to Mexico fell in 1995, but rose above 1994 levels in 1996.

U.S. benefits politically and economically. NAFTA offers the opportunity to develop institutions that provide formal mechanisms for discussion, consultation, and resolution of issues. New institutions of consultative bodies included those of trade, harmonization of standards, labor, and environmental issues. By creating these institutions, the largest populated countries of North America have begun working toward greater cooperation and understanding.

We have three men to thank… From left to right: Carlos Salinas de Gortari of Mexico, George H.W. Bush of the U.S.A., and Brian Mulroney of Canada in December of 1992.