The North American Free Trade Agreement (NAFTA) is an international trade agreement between the United States, Canada and Mexico that entered into force on January 1, 1994. Under NAFTA, most tariffs between the three countries will be phased out over a fifteen-year period. In addition, the agreement liberalizes the rules governing U.S. and Canadian business investment in Mexico. NAFTA includes sub-agreements on the environment, labour and how to deal with increased imports. The controversy surrounding the introduction of NAFTA by the United States in 1993 included issues related to trade, employment, immigration, labour law and environmental protection. And a few years after its entry into force, observers continue to debate the wisdom of the agreement. The economic downturn in the United States, which began in 2001, has intensified public debate on NAFTA provisions. NAFTA removes certain barriers to trade that are not subject to tariffs. For example, NAFTA allows financial service suppliers from one NAFTA country to establish banking, insurance, securities and other types of financial services in another NAFTA country. NAFTA also provides U.S. and Canadian companies with better access to Mexican energy markets.
Under NAFTA, U.S. and Canadian companies can sell products to PEMEX, Mexico`s federal oil company. In addition, Mexico has opened the operation of self-generated, cogeneration and independent power plants in Mexico to investment by U.S. or Canadian companies. The terms of the agreement state that NAFTA prevails in the event of a conflict between it and other existing agreements. This does not apply to specific trade obligations under the Convention on International Trade in Endangered Species of Wild Fauna and Flora, the Montreal Protocol on Substances that Deplete the Ozone Layer and the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal. As the leaders of Mexico and the United States sought to allay the fears of those who opposed NAFTA at home, the fate of the pact in the early 1990s had implications beyond North America`s borders. When President George Bush and Mexican President Carlos Salinas de Gortari announced the possibility of a free trade agreement between Mexico and the United States in June 1990, Bush also announced the Enterprise for the Americas initiative, which provided for a free trade bloc from Alaska to Tierra del Fuego. This announcement preceded a staggering number of new trade alignments in Latin America, including the March 1991 agreement between Argentina, Brazil, Paraguay and Uruguay establishing MERCOSUR, which committed to integrating their economies by 1995, and numerous framework trade agreements between the United States and its southern neighbors. In March 1991, President Bush asked Congress to apply expedited legislation to the proposed North American Free Trade Agreement, and Congress agreed. Fast Track is a quick procedure for working on important legislation. The expedited procedure was included in the Trade Act 1974.
It provides for a strict timetable, a limitation on the time devoted to debate and the prohibition of adding amendments to the bill or resolution. Fast Track provides a 90-day window between when the president notifies Congress and when he actually signs the agreement. U.S. Department of Commerce. Trade Information Centre. „NAFTA Update“. Established on 20 December 1999; last amended Jan 17, 2002 [cited 2002 Aug 1]. tradeinfo.doc.gov. The more than 500-page NAFTA document is a complex legal agreement that spells out in detail all aspects of a free trade area that represented a combined economy of $6.5 trillion and 370 million people in 1992. The North American Free Trade Agreement created the world`s largest integrated market for goods and services. NAFTA was also designed as a guide for trade liberalization throughout the Western Hemisphere.
In a political context, NAFTA represents an economic integration plan that expands the deregulation and free market agenda of the governments of the United States, Canada and Mexico. Governments led by Presidents Ronald Reagan and George H. W. Bush in the United States, Prime Minister Brian Mulroney in Canada, and President Carlos Salinas in Mexico have launched national reform programs in which market principles have supplanted other institutional goals and organizations. Known as neoliberalism – where market forces are seen as the most efficient and cost-effective mechanism for the allocation of all social goods – this ideological context virtually guaranteed a market-based approach to North American integration. In this way, NAFTA has become a neoliberal counterpart of the Maastricht Treaty, the more social-democratic of Europe. The Bush administration had the support of most of the major American industrial groups, which could benefit from lower Mexican wages. As a result, the administration has requested an „expedited“ negotiating status for NAFTA, which allows a president to negotiate international trade agreements and submit them to Congress for approval without amendments.
In 1991, Congress granted NAFTA fast-track status. .