Critics of NAFTA often focus on the U.S. trade balance with Mexico. While the United States enjoys a slight advantage in services trade by exporting $30.8 billion in 2015 and importing $21.6 billion, its overall trade balance with the country is negative due to a yawning deficit of $58.8 billion in merchandise trade in 2016. In comparison, in 1993, the surplus was $1.7 billion (in 1993, the deficit was $36.1 billion in 2016). The immediate objective of NAFTA was to increase cross-border trade in North America, and in this regard it has undoubtedly been successful. Reducing or eliminating tariffs and removing certain non-tariff barriers, such as. B Mexican local content requirements, NAFTA has led to an increase in trade and investment. Most of the increase came from trade between the United States and Mexico, which totaled $US 481.5 billion in 2015, and trade between the United States and Canada, which amounted to $US 518.2 billion. Trade between Mexico and Canada, while by far the fastest growing channel between 1993 and 2015, was only $34.3 billion. The structure of NAFTA was to increase cross-border trade in North America and stimulate economic growth for the parties involved.
Let`s start with a brief overview of these two problems. Progress was made on a number of topics discussed during the discussions, including telecommunications, pharmaceuticals, chemicals, digital trade and anti-corruption provisions. But how to measure the origin of auto content has proven to be a sore point, with the U.S. fearing an influx of Chinese auto parts. The talks are further complicated by a World Trade Organization (WTO) procedure launched by Canada against the United States in December. But while Mexico is „beating us economically“ in the commercial sense of the word, imports were not the only ones responsible for the real growth in merchandise trade of 264% between 1993 and 2016. Exports in real terms to Mexico more than tripled during this period and increased by 213%. But imports exceeded them at 317%. NAFTA came into force in 1994 under the Clinton administration. The objective of the agreement was to stimulate trade in North America between Canada, the United States and Mexico.
It also aimed to remove trade barriers between the three sides as well as most taxes and customs duties on products imported and exported by both sides. Led by the auto industry, the largest export category, Mexican automakers hold a $58.8 billion trade surplus for goods with the United States before NAFTA there was a deficit. They have also contributed to the growth of a small, educated middle class: in 2015, Mexico had about nine engineering graduates per 10,000 people, compared to seven in the United States. For Mexican optimists, NAFTA looked promising in 1994. It was an extension of the 1988 Canada-United States Agreement. The country underwent difficult reforms and began to shift from the kind of economic policy pursued by one-party states to an orthodox free market orthodoxy. Proponents of NAFTA argued that the economy`s attachment to that of its richer northern neighbors would ensure these reforms and spur economic growth, ultimately leading to a convergence of living standards between the three economies. NAFTA shows the classic dilemma of free trade: diffuse benefits at concentrated costs. While the economy as a whole may have recovered slightly, some sectors and communities have experienced profound disruptions. A southeastern city loses hundreds of jobs when a textile factory closes, but hundreds of thousands of people find their clothes slightly cheaper. Depending on how it is quantified, the overall benefit is probably greater, but not very noticeable at the individual level; In the grand plan of things, the overall loss is small, but devastating for those it directly affects.
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