The North American Free Trade Agreement - Assignment Example

The policies of NAFTA were re-structured and further re-implemented in the year 2008 which highly emphasized the elimination of tariffs as well as trade restrictions concerning the mentioned three countries. Moreover, the policies also focused upon codifying a broad assortment of agreements related to textile, agriculture, telecommunications, auto trade, intellectual properties, the flexibility of workers, and environmental policies (Ford, “A brief history of NAFTA”).

NAFTA was established in the year 1994 for the purpose of trimming down the costs related to trading, raising business funds, and most significantly promoting financial growth among Mexico, Canada, and the US. The agreement i.e. NAFTA which was duly signed by the different leaders of the participating nations was ratified by the Congress of the US in the year 1993. It was observed that the agreement proved to be quite controversial as most of the manufacturing industries, as well as the makers of agricultural commodities belonging to the US, faced the threat of losing the business market by competing with the Canadian along with Mexican business firms due to their lower cost arrangements (Ford, “A brief history of NAFTA”).

NAFTA was formed to serve several significant purposes. The major functions included the abolition of tariffs in relation to the imported products, relaxation in non-tariff related structures which included licensing, import quotas, and blockade schemes in the technical field of trade and most importantly safeguarding the different intellectual properties such as copyrights and patents among others. Additionally, the fundamental purpose of NAFTA is to ensure and maintain a smooth flow of goods as well as services by making substantial investments. Moreover, the agreement aimed to provide each of the participating countries the prominence in terms of substantial favored trade in the business market. With regard to the purpose of NAFTA, it has been observed that the agreement encompassed certain important areas which comprised the abolition of non-tariff associated trade barriers, augmentation of financial investments, and reduction of environmental issues. Moreover, the agreement also entailed segments such as trimming down the tariffs and developing the trade rules such as dispute settlement methods. However, on the basis of the above discussion, it can be stated that the chief aim of NAFTA is to generate a situation of free trade amid the nations of Mexico, Canada, and the US by the exclusion of tariffs along with other trade barriers. The agreement i.e. NAFTA can be considered as a major initiative owing to the different imperative purposes of the trade policies (Rosson, Benson, Moulton and Sanders, “The North American Free trade Agreement and U.S. Agriculture”).

NAFTA was found to pose significant effects upon the world economy of the US. Due to the implementation of NAFTA, the trade relations between the nations i.e. Mexico, Canada, and the US broadened substantially. It becomes necessary to be stated in this context that the supporters of NAFTA declared the agreement to be a successful one for supporting the producers of the US by generating a free trade amid the participating nations. Moreover, the agreement benefited the trade of the mentioned nations by reducing the inflation rate through the removal of tariffs. The other major effect of NAFTA on the world economy of the US related to the support which was provided to the business investors belonging to the nation by escalating the possibility of new business opportunities at large. The agreement i.e. NAFTA emphasized safeguarding the intellectual properties of the US which ultimately favorably affected the world economy by a considerable level. It was apparently observed that NAFTA also majorly influenced the flow of bilateral trades amid the nations of Mexico, Canada, and the US as it eliminated tariffs as well as other non-tariff-related trade barriers. Furthermore, by the implementation of NAFTA, the risks of the investors were significantly reduced as they were provided the opportunity to make lawful claims in opposition to the government while acquiring their property (Rosson, Benson, Moulton and Sanders, “The North American Free trade Agreement and U.S. Agriculture”).

Apart from the aforementioned positive effects, it was learned that NAFTA also posed a serious adverse impact upon the world economy of the US. In this regard, a huge reduction in jobs related to manufacturing in the US was witnessed since the year 2000 owing to the execution of NAFTA which eventually gave rise to a large trade deficit. Along with reducing the prospect of employment, the agreement also reduced the competitiveness of the nation which ultimately affected the world economy by a significant level (Engler, “What Nafta Trade Deficit?”).     

NAFTA, established in the year 1994, can be regarded as the agreement aimed to reduce the tariffs as well as other non-tariff related trade barriers for the motive of facilitating smooth movement of services and goods among the nations of Mexico, the US, and Canada. The major aims of NAFTA were to safeguard intellectual properties, raise new business opportunities, and support investors, and also to remove tariffs for the development of the mentioned nations.

There were several significant consequences of NAFTA upon the world economy and that of the US. The positive results included augmentation in the trade relations between the participating countries and the rise of new business opportunities for the investors among others. Conversely, one of the negative consequences of NAFTA related to the decrease in employment which gravely influenced the international economy of the US by a considerable level.