Write 4 page essay on the topic NAFTA: United States, Canada and Mexico Trading Together.Download file to see previous pages By campaigning on a common market, President Ronald Reagan actually began f

Write 4 page essay on the topic NAFTA: United States, Canada and Mexico Trading Together.

By campaigning on a common market, President Ronald Reagan actually began formation of NAFTA, which lead to the passing of the Trade and Tariff Act in 1984. The act gave the president authority to negotiate free trade, but only allowing Congress the ability to approve or disapprove. Congress was not allowed to change any negotiating factors. Canada and the United States began negotiations for the Canada and US free trade agreement, which was put into effect in 1989. This treat is now suspended due to onset of NAFTA.

Mexican President Salinas and President Bush began negotiations for a trade agreement between Mexico and the United States. History shows that Mexican tariffs on US Imports were 250 percent higher than US tariffs on Mexican imports. Canada was the first to suggest an agreement between the three countries, which lead to NAFTA. Since the signing of the NAFTA agreement in 1994, two addenda have been added. NAFTA has linked 450 million people from differing countries producing $17 trillion worth of services and goods. NAFTA was originally signed into law for a period of 15 years. NAFTA eliminated tariffs and created an agreement based on the rights of international business investors. This reduced the cost of trade, which promotes growth and investment. Eliminating tariffs also reduces inflation by lowering the cost of imports. Some features of NAFTA that specify its purpose were to eliminate existing barriers to trade and make effective the cross-border movement of services and goods. It was also to promote an atmosphere of fair competition.

This, in turn, created increased investment opportunities for all three countries. Other features included providing enforcement and protection of intellectual property rights and creating procedures for the resolution of trade disputes. A precedence was also set that established framework for further expansion in trilateral, regional and multilateral benefits of the agreement. It also gave the three countries “most favored nation” status. There are, of coarse, positive and negative aspects to NAFTA. Trade between the three countries has tripled from $297 billion in 1993 to $1 trillion in 2007. Trade has grown due to the fact that NAFTA gives the ability for companies in the treaty to bid on government contracts, and protects intellectual properties. NAFTA has also boosted US farm exports to Canada and Mexico. We have seen a 22 percent increase in 1993 to 30 percent in 2007. Mexico is our top destination for exports in beef, corn sweeteners, rice, soybeans, apples and beans. Service exports have also been increased to 50 percent of US GDP services. This includes financial services and health care. Service exports hit $40 billion in 2007. Another benefit is reduced oil and grocery prices. It is important that we import oil from friendly countries. It reduces our dependence on countries from the Middle East and Venezuela. Both Venezuela and Iran have been selling oil in currencies other than the US dollar, which contribute to lowing the value of our dollar. The same is true for food imports. NAFTA has also allowed for stepped up foreign direct investments.