Recently NAFTA, or the North American Free Trade Agreement, has reemerged in the news as a controversial agreement for the United States. With increased rhetoric and questions surrounding the legitimacy of the document, it is important to understand the foundational aspects of the agreement, and the role of the United States. Let’s break down NAFTA.

What exactly is NAFTA?

Beginning on January 1, 1994, NAFTA came about after multilateral talks between the United States, Canada and Mexico began in 1991. From the Office of the United States Trade Representative, “tariffs were eliminated progressively and all duties and quantitative restrictions, with the exception of those on a limited number of agricultural products traded with Canada, were eliminated by 2008.” This agreement intended to increase the flow of trade between the three countries. It allowed for greater competition of products and services.

What does NAFTA cover?

This document includes agricultural products, sanitary measures, customs origins, protection of intellectual property, textiles and automobiles. An important point, President George H.W. Bush signed the document in 1992. However, final changes were implemented, and the document ultimately passed through Congress in 1993, under President Bill Clinton. NAFTA was regarded as a bipartisan effort to increase trade within North America.

What are NAFTA “eliminations”?

All three countries eliminated all import tariffs between them. This applied to all manufactured products. During this time there was a 267% increase in total goods trade for the United States. According to Investopedia, “approximately one-third of U.S. exports, particularly machinery, vehicle parts, mineral fuel/oil and plastics, are destined for Canada and Mexico.” By eliminating the tariffs initially placed on these products, the US can export these items at a higher rate and make a greater profit on them.

Why is NAFTA back in the news?

President Trump has made recent headlines when he declared that his administration wants to renegotiate the terms of NAFTA. If not, the United States will pull out of the deal. The Trump Administration cites a loss of manufacturing jobs as the primary reason for wanting to renegotiate. Due to the increased flow of goods across borders, the deal also makes it easier for companies to move their operations or headquarters from the United States to Mexico. There have been conflicting reports as to whether the deal hurts or saves American jobs. From CNN and the Economic Policy Institute, approximately 800,000 jobs have been lost to Mexico from the deal. Yet, the U.S. Chamber of Commerce claims that approximately 6 million jobs depend on increased trade with Mexico.

Does the President have the authority to remove the U.S.?

Yes, the President can fairly easily remove the US from the deal. There is no language in the document that requires Congressional approval to pull out. President Trump can remove the US on his own. However, there may be domestic implications for such a move, and Congress may have greater clout in terms of domestic policy. The only stipulation requires that a party to the agreement must notify the other members of their intended departure. The formal removal can take place six months after the initial telling.

Joleen T
FFL Contributor
Joleen is a Contributor at FFL. She enjoys reading, going to Chipotle, and drinking copious amounts of coffee. You can find her at the library, or studying for the LSAT. Her goal is to become a lawyer, and eventually run for public office. Her role models are Nikki Haley and Sandra Day O’Connor.

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