North American Free Trade Agreement

The North American Free Trade Agreement (NAFTA) is an agreement between the United States, Canada and Mexico that’s goal is to eliminate all trade barriers between the nations within fifteen years of initial employment (January 1, 1994).  Five years previous to NAFTA, the United States and Canada established a free trade zone with each other.   NAFTA is an extension of this free trade zone primarily focused to remove the trade barriers between Mexico and its two northern neighbors.   

One example of the effects of NAFTA on the US is in the agricultural sector of the economy.  American producers of agriculture have experienced the benefits of NAFTA.  Before the implementation of free trade, US farmers faced a 10% tariff on exports to Mexico while Mexican farmers faced only a 2% tariff to the US.  Since NAFTA, US agricultural exports to Mexico have drastically increased as well as increasing five-fold to Canada.

http://www.ustr.gov/Trade_Agreements/Regional/NAFTA/Section_Index.html

Some feared that with the implementation of NAFTA there would be a “great sucking sound” of American manufacturing jobs being moved to Mexico due to its inexpensive labor.  However, this has not been the case.  US manufacturing output increased 44% in the 1990s and employment grew by 20 million workers.  Although this may not entirely be the direct result of NAFTA, it is certainly not the “great sucking sound” that was feared.

For more information visit         http://www.nafta-sec-alena.org/DefaultSite/index.html