North American Free Trade Agreement

What is NAFTA?

The North American Free Trade Agreement (NAFTA) is a trade agreement between the United States, Canada, and Mexico designed to increase trade (imports and exports) and investment between the three countries.

NAFTA eliminates taxes on imports and exports of goods and services, making them less expensive and promoting trade.

How long has NAFTA been in existence?

The concept for NAFTA was first suggested by President Ronald Reagan in 1979. In 1990, the presidents of the three countries (U.S. President George H. W. Bush, Mexican President Carlos Salinas de Gortari, and Canadian Prime Minister Brian Mulroney) began negotiations, and in December of 1992 they signed an agreement (pending approval from the legislative branches of all three countries).

President Bill Clinton signed NAFTA into law on December 8, 1993, and it became effective on January 1, 1994. Included with NAFTA are two supplementary agreements:

What are the pros and cons, and what have been the effects of NAFTA?

Pros:

increased trade (total trade has quadrupled from $297 billion in 1993 to $1.14 trillion in 2015, and U.S. exports increased from $142 billion to $517 billion)
lower consumer prices on imported goods (and reduced U.S. reliance on oil imports from the Middle East and Venezuela)
increased exports (in the U.S, especially in agriculture, automotive, health care services, and financial services)
U.S. exports resulted in the creation of nearly 5 million U.S. jobs (U.S. imports created some U.S. jobs also)
increased foreign direct investment (FDI)
reduced government spending (due to competition on government contracts)

Cons:

loss of 500,000-750,000 U.S. jobs
job migration (primarily to Mexico) caused wage supression in the U.S. (primarily in the automotive, textile, computer, and electrical appliance industries)
loss of 1.3 million Mexican farm jobs (due to government-subsidized/lower-priced U.S. farm products flowing into Mexico)
many out-of-work farmers went to work in sub-standard conditions in the Maquiladora program
degradation of the Mexican environment (Mexican farmers used more fertilizers to try and compete, and they began farming "marginal" land causing deforestation)
as written, NAFTA allowed sub-standard Mexican trucks free access to U.S. roads (creating a safety problem), but this feature of NAFTA was never implemented (Mexican trucks have a 20-mile limit within the U.S.)

What other factors should be considered when analyzing the overall affect of NAFTA?

Although the U.S. trade deficit with Canada and Mexico has increased under NAFTA, that deficit is currently less than 10% of the total (world) U.S. trade deficit. Also, the U.S. trade deficit with Canada and Mexico has been more or less stable for the past six years.

Relative to the size of the total U.S. economy, trade with with Mexico and Canada isn't that big (4.6% in 1994 and 6.7% in 2015).

Other factors have had a significant effect on U.S. jobs:

the Mexican peso crisis of 1994-95
the global financial crisis and U.S. recession of 2008
the rapid growth of China
a stong U.S. dollar has made it more profitable to manufacture abroad
automation and the decline of U.S. manufacturing jobs, which have declined at the same rate as in Europe, the United Kingdom, and Japan

Source:

Gillespie, Patrick. (November 15, 2016). "NAFTA: What it is, and why Trump hates it". CNN. Retrieved 2017-11-28.

(February 2, 2017). "In defence of NAFTA". The Economist. Retrieved 2017-11-28.

"North American Free Trade Agreement". Wikipedia. Retrieved 2017-11-28.

Amadeo, Kimberly. (Jul 7, 2017). "Do NAFTA's 6 Pros Outweigh Its 6 Cons?". The Balance. Retrieved 2017-11-28.

Amadeo, Kimberly. (Jul 7, 2017). "6 Advantages of NAFTA". The Balance. Retrieved 2017-11-28.

Amadeo, Kimberly. (Jul 7, 2017). "6 Problems With NAFTA". The Balance. Retrieved 2017-11-28.

Holodny, Elena. (October 24, 2017). "BANK OF AMERICA: 2 charts show why ripping up NAFTA wouldn't solve Trump's big issues with the deal". Business Insider. Retrieved 2017-11-28.

NAFTA and the Trump administration

Trump has called NAFTA the "worst trade deal in history".

Article 2205 of the NAFTA agreement gives any country the ability to withdraw from the agreement provided six months notice is given, but it's unclear if Trump needs congressional approval to do so.

Yes, 'President Trump' really could kill NAFTA - but it wouldn't be pretty | CNN

Can Congress Block Trump if He Pulls Out of NAFTA? | Foreign Policy

We asked 6 experts if Congress could stop Trump from eliminating NAFTA | Vox

Jan 16, 2020:

https://www.pbs.org/newshour/show/what-are-the-differences-between-nafta-and-the-usmca
https://www.pbs.org/newshour/economy/making-sense/these-4-changes-helped-trump-and-democrats-agree-to-the-usmca-trade-deal
https://www.npr.org/2020/01/16/796901909/senate-oks-north-american-trade-deal-to-replace-nafta-giving-trump-a-much-needed

Dec 19, 2019:

https://www.usatoday.com/story/news/politics/2019/12/19/usmca-house-approves-new-trade-agreement-mexico-canada/2696763001
https://www.vox.com/policy-and-politics/2019/12/19/21013178/usmca-trade-deal-passes-house-vote-approve-bipartisan-nafta-trump
https://www.vox.com/2018/11/30/18119700/usmca-nafta-replacement-g20-trump

Dec 10, 2019:

https://thehill.com/policy/finance/473835-pelosi-announces-support-for-new-trump-nafta-deal
https://www.pbs.org/newshour/show/how-the-usmca-trade-deal-differs-from-nafta-and-how-it-doesnt
https://www.vox.com/2018/10/3/17930092/usmca-mexico-nafta-trump-trade-deal-explained
https://thehill.com/homenews/senate/473927-mcconnell-senate-will-not-take-up-new-nafta-deal-this-year

May 30, 2019:

https://thehill.com/policy/finance/446228-white-house-to-start-clock-on-approval-for-new-nafta-reports

Apr 30, 2019:

https://thehill.com/policy/finance/trade/441389-mulvaney-rejects-democratic-calls-to-renegotiate-updated-nafta

Apr 7, 2019:

https://www.reuters.com/article/us-trade-nafta-analysis/new-nafta-deal-in-trouble-bruised-by-elections-tariff-rows-idUSKCN1RJ0BS

Dec 1, 2018:

https://thehill.com/homenews/administration/419310-trump-to-terminate-nafta-pressuring-congress-to-approve-new-trade

Nov 30, 2018:

https://www.cnn.com/2018/11/30/politics/trump-signs-usmca/index.html

Oct 1, 2018:

https://thehill.com/homenews/administration/409250-trump-takes-victory-lap-after-nafta-deal
https://thehill.com/homenews/administration/409190-trump-touts-new-trade-deal-with-canada-as-historic-transaction
https://thehill.com/policy/finance/409344-five-things-to-know-about-trumps-new-nafta
https://www.politico.com/story/2018/10/01/trump-nafta-trade-canada-tariffs-mexico-823649
https://www.ctvnews.ca/politics/trudeau-freeland-herald-usmca-as-trilateral-victory-1.4116238

Sep 30, 2018:

https://thehill.com/policy/finance/409182-us-canada-reach-nafta-deal-report

Sep 26, 2018:

https://thehill.com/policy/finance/408639-trump-says-he-refused-meeting-with-trudeau-his-tariffs-are-too-high
https://www.reuters.com/article/us-trade-nafta/trump-slams-canada-over-nafta-says-rejected-trudeau-meeting-idUSKCN1M6234

Sep 1, 2018:

http://thehill.com/policy/finance/404696-trump-no-political-necessity-to-keep-canada-in-nafta-deal
http://thehill.com/policy/international/global-trade-economy/404722-trump-blasts-trade-talks-with-canada-we-shouldnt

Aug 31, 2018:

http://thehill.com/policy/finance/404619-trump-notifies-congress-of-trade-deal-with-mexico

Aug 19, 2018:

http://thehill.com/policy/finance/402428-time-running-out-for-trumps-nafta-talks

May 17, 2018:

https://www.reuters.com/article/us-trade-nafta/nafta-nations-nowhere-near-a-deal-ustr-lighthizer-idUSKCN1II2BU
https://www.bloomberg.com/news/articles/2018-05-17/nafta-deadline-arrives-with-little-prospect-for-an-agreement

May 11, 2018:

https://www.reuters.com/article/us-trade-nafta/negotiators-fail-to-reach-nafta-deal-trump-launches-new-attack-idUSKBN1IC1P5

Apr 27, 2018:

https://www.reuters.com/article/us-trade-nafta/nafta-officials-put-top-level-talks-on-hold-until-may-7-to-consult-with-industry-idUSKBN1HY20B

Mar 7, 2018:

The seventh round of NAFTA talks in Mexico City, Mexico ended today.

NAFTA negotiators conclude talks on food safety: source | Reuters

The steel elephant in the room at NAFTA Round 7 | Politico

NAFTA round 7 has progress for aggies | Politico

rump's NAFTA negotiator: 'Time is running very short' | Politico

Jan 29, 2018:

The sixth round of NAFTA talks in Montreal, Canada ended today. The next round is scheduled to begin February 26 in Mexico City, Mexico.

U.S. rejects proposals to unblock NAFTA, will seek 'breakthroughs' | Reuters

Trump's trade chief clashes with Canada, Mexico in NAFTA talks | Politico

Jan 22, 2018:

The sixth round of NAFTA talks began in Montreal, Canada.

What's on the horizon as the 6th round of NAFTA talks begin in Montreal today? | The Council of Canadians

Dec 11, 2017:

Fact-finding major goal for Canada at between-round NAFTA talks this week | CBC/Radio-Canada

'Worker bee' round of NAFTA talks to focus on easier chapters | Reuters

Nov 21, 2017:

NAFTA talks hit wall as Mexico, Canada push back on U.S. demands | Reuters

Nov 17, 2017:

The fifth round of talks began today in Mexico City, Mexico.

Reuters reported that Canada's union leader, Jerry Dias, was told by Canada's chief negotiator, Steve Verheul, in a private meeting that the United States was "not showing any flexibility".

Key NAFTA talks open in Mexico amid complaint of U.S. inflexibility | Reuters

NAFTA negotiators begin meeting in Mexico City for 5th round | The Yucatan Times

Oct 11, 2017:

Round 4

Trump: Tearing up NAFTA 'will be fine' | CNN

Trump's tough trade talk meets the NAFTA negotiating table | CNN

Mexico and Canada slam U.S as NAFTA talks are pushed into 2018 | CNN

Sep 23, 2017:

Round 3

Mexico opens way for NAFTA talks to run into 2018 | Reuters

NAFTA talks intensify; U.S. seen putting off key demand on autos | Reuters

Sep 1, 2017: