NAFTA Historical Beginning of NAFTA With Specific Term Paper
- Length: 89 pages
- Subject: Economics
- Type: Term Paper
- Paper: #35869787
Excerpt from Term Paper :
Historical Beginning of NAFTA (with specific bibliography)
What is NAFTA
The Promise of NAFTA
Structure of NAFTA
Years of NAFTA (NAFTA not enough, other plus and minuses)..
Comparative Statements (Debate)
NAFTA - Broken Promises
NAFTA - Fact Sheet Based Assessment
NAFTA & Food Regulation
NAFTA - The Road Ahead
NAFTA in Numbers
This study set out to examine the inner workings of the North American Free Trade Agreement. The aim of this study is to assess whether the NAFTA agreement is viable, and whether it has achieved the goals that it set out to accomplish. For purposes of this study, objective information was gathered to assess many different aspects of the NAFTA agreement, including but not limited to the following: History, Structure, Provisions, Issues, Statements and Milestones.
Purpose of Study
The purpose and aim of this study was to achieve an unbiased analysis regarding NAFTA and assess whether or not NAFTA has achieved its goals and objectives. More than 200 resources will be examined for purposes of this study.
In order to truly grasp the full impact of NAFTA and its objectives, we need to first study, examine and understand the history of GATT to get a clear perspective on the need and emergence of NAFTA.
The well being of any country has long been contingent upon its ability to maintain and establish international trade; this fact has long been recognized. Countries are in contention however, the degree of openness of the economy to the penetration of foreign goods and services. During the 1700's a majority of people held the belief that trade existed in a "dog-eat-dog" world. The conventional wisdom of Mercantilism suggested that a country could gain related to trade only at the expense of its rivals. It also supported the notion that a country could grow rich as a result of the amount of gold that it amassed via sale of domestically produced goods to foreigners, while at the same time constraining the amount of foreign products that would be sold in the domestic market. Protecting the domestic market was held to be a sacrosanct belief.
The mercantilist view of trade was challenged later during the 1800s, primarily by theorists such as David Ricardo and Adam Smith, who argued that international trade could benefit both domestic partners and foreign associates. Trade could in essence become a "win-win" situation. For this to happen, two conditions must be present::
All countries involved must specialize by producing and subsequently selling the goods that it was able to using the most efficient methods relative to the capabilities of other countries, a theory referred to as the law of comparative advantage, somewhat similar to an international division of labor;
Countries must agree to a free, unregulated flow of goods between countries, creating a sort of international "laissez faire" state of existence.
In 1846 in Britain, the idea and belief in the "economic and moral rightness" of Free trade became a kind of national dogma. The free trade idealism took some time to reach America. For a long time the U.S. governing class held on hard to the idea of protectionism. The idea of protectionism was even more pronounced when Alexander Hamilton drafted his Report on the Manufacturers, which called for protection of infant industries operating throughout the nation. This idea was present in the Smoot-Hawley Act of 1930, which raised tariff rates in the U.S. By as much as 50% between the years of 1929 and 1932.
During the 1930s the great depression brought convergence on trade issues across the Atlantic. Reassessment, realignment and restructuring of many economies followed, resulting in tariff wars that were in fact destructive to all concerned.
A new model for operation was subsequently ushered in during the Post World War II ear. During the Bretton Woods Conference, and International Monetary Fund was created in an effort to oversee international monetary and exchange rate systems.
Finally during 1946, the General Agreement on Trade and Tariff was created at the first session of the Preparatory Committee of UN Conference on Trade and Employment. Referred to as GATT, its initial purpose was primarily to negotiate "tariff concessions" among countries that were members. GATT also set out to establish a code for conducting business among members. This code of conduct included development of a set of procedures that were to be used for resolving trade disputes via negotiations; successive negotiations were referred to as rounds.
Nondiscrimination and multilateralism in international trade were among the principles that GATT was founded on. By this convention "if the tariff on imports from one country is decreased, the tariff on all imports of the same goods from other GATT members must be reduced."
Many factors and circumstances led up to the creation of NAFTA. Many have suggested that the most important factor was the decline in U.S. international competitiveness. Part of the U.S. decline was due to the rise of Japan as a serious rival within the U.S. domestic as well as the global marketplace.
Multilateralism, favored not only U.S. corporations during the 1950s and 1960s, but also foreign rivals. The U.S. faced competition from corporations across the globe due to free trade. The primary competition came from the revitalized economies of Western Europe and Japan. The U.S. In fact discovered that it was losing out in certain industries it had relied upon in the past, including the following: cars, consumer electronics, textiles and apparel. The U.S. still was maintaining its edge however in non-traditional areas including high technology, pharmaceutical as well as communication systems.
During this time the U.S. sought out ways to ensure a competitive edge in part by promoting the expansion of GATT rule into areas defined as non-traditional. The U.S. also aspired to "stem the hemorrhage" traditional areas of comparative advantage. This was accomplished by emphasizing the idea of creating a "level playing field," supporting notions of "fairness" and reciprocity through managed trade, as well as ending European subsidies on agriculture. It was also dissatisfied with the GATT's dispute resolutions process. The U.S. encountered stiff resistance from the members of GATT. Most developing countries and quite a number of developed countries balked and the process stalled.
At the same time the U.S. was seeking ways to ensure a competitive advantage, Latin American countries were faced with a plethora of external debts. The economy in Latin America was suffering severely due to this. A majority of the debts owed were to American banks. In order to resolve the situation, an infusion of new money would be required. A second consideration, to manage the debt crisis countries in debts might be required to restructure their economies along the lines of U.S. policy dictations. Among the prescription dictated by the U.S. included elimination of fetters on the free market and privatization of areas of the economy which previously resided under public control, thus eliminating any restrictions on public investment.
Given this background the interests of the U.S., faced with difficulty negotiating the Uruguay round of GATT and competition from Japan and other Asian countries, as well as the consolidation of the European single market, concluded that it was time "to exploit for ourselves our own market." Thus the U.S. started to look toward Canada, Mexico and Latin America..
Thus, NAFTA was negotiated and approved with bipartisan support in the U.S. President Reagan in 1980 proposed a "North American Accord." Following this, in the mid 1980s President de la Madrid began a dramatic opening of the Mexican economy leading to Mexico's accession to the General Agreement on Tariffs and Trade (GATT) in 1987. President Bush subsequently took on negotiations that were intended to lock in the trade investment liberalization. President Clinton subsequently supported this agreement.
In the meantime, the U.S., Canada, and Mexico were facing many "trans-border" problems that were environmentally based, including the following: air and water pollution and disposal of hazardous wastes
During President Reagan's campaign in 1980, NAFTA was approved in the U.S. Following this in the mid-1980s the Mexican economy began opening, which as discussed led to Mexico's accession of GATT in 1987.
NAFTA in its early stages was a topic much debated, especially among the U.S., Canada and Mexico. President George Bush in the United States played a major role in drafting the agreement, and his successor, President Bill Clinton helped promote and implement NAFTA thereafter. There are many who opposed NAFTA, believing it would cost Americans jobs and take advantage of deregulated markets. Others believed that acceptance of NAFTA would result in human rights abuses. Advocates of NAFTA however, argued that the implementation of the agreement would ultimate help regulate not only trade but also environmental issues such as pollution along the borders
Many argue that NAFT was built on the Canadian-U.S. Free Trade area, or (CUSTA).
In brief, CUSTA may be defined by the following criteria:
1. It was formed on January 1, 1989
2. Within 10 years, a…