What Is The Primary Purpose Of The North American Free Trade Agreement

Shortly after his election, U.S. President Donald Trump said he would begin renegotiating NAFTA terms to resolve trade issues for which he campaigned. The heads of state and government of Canada and Mexico have expressed their willingness to cooperate with the Trump administration. [129] Although he vaguely formulated the precise terms he wants in a renegotiated NAFTA, Trump has threatened to withdraw from it if negotiations fail. [130] Many critics of NAFTA saw the agreement as a radical experiment developed by influential multinationals who wanted to increase their profits at the expense of ordinary citizens of the countries concerned. Opposition groups argued that the horizontal rules imposed by nafta could undermine local governments by preventing them from enacting laws or regulations to protect the public interest. Critics also argued that the treaty would lead to a significant deterioration in environmental and health standards, promote privatization and deregulation of essential public services, and supplant family farmers in the signatory countries. After the election of President Trump in 2016, support for NAFTA was highly polarized between Republicans and Democrats. Donald Trump has expressed a negative view of NAFTA, calling it “the worst trade deal ever adopted in this country.” [159] Republican support for NAFTA has grown from 43% in 2008 to 34% in 2017. Meanwhile, Democrats` support for NAFTA has grown from 41 percent in 2008 to 71 percent in 2017. [160] On August 27, 2018, Trump and Mexico agreed on a bilateral trade agreement to replace NAFTA and threatened to ignore Canada. Canada joined on September 30, 2018.

On November 30, 2018, the three countries reached an agreement. The new agreement is called the agreement between the United States, Mexico-Canada and has been ratified by the legislative branch of each country. Mexico ratified it on June 19, 2019. The United States ratified the agreement on January 29, 2020. The Canadian Parliament ratified the USMCA on March 13, 2020. From June to the end of August 2018, Canada was sidelined due to bilateral discussions between the United States and Mexico. [137] On August 27, 2018, Mexico and the United States announced that they had reached a bilateral agreement on a revised NAFTA trade agreement, which includes provisions that would boost U.S. auto production[138] a 10-year data protection period against generic drug production on an expanded list of products enjoyed by pharmaceutical companies. , particularly U.S. manufacturers of high-quality bionological drugs. , a sunset clause – a 16-year expiry date with periodic audits over 6 years to eventually extend the contract for an additional 16 years, and a high de minimis threshold, where Mexico increased the de minimis value of US$50 in terms of duty-free and tax-free online purchases to $100.

[139] [140] According to an August 30 article in The Economist, Mexico has agreed to increase the rules of origin, which would mean that 75% of a vehicle`s components must be manufactured in North America, as opposed to the previous 62.5%, in order to avoid tariffs. [141] Given that automakers are currently importing cheaper components from Asia, consumers would pay more for vehicles under the revised agreement. [142] In addition, approximately 40 to 45 per cent of vehicle components must be produced by workers earning at least $16 an hour, as opposed to the current $2.30 per hour that a worker earns on average at a Mexican auto plant. [141] [142] The Economist described this as a “Mexican car construction in a straitjacket”. [141] The Clinton administration negotiated an environmental agreement with Canada and Mexico, the North American Environmental Cooperation Agreement (NAAEC), which resulted in the creation of the Commission for Environmental Cooperation (CEC) in 1994.