Effectiveness and Sufficiency North American Free Trade Agreement (NAFTA)
Lots of credits are attributed to NAFTA for opening up the trade links among countries for mutual benefits. It has; therefore, created effective producing processes, increase in goods at affordable prices to the consumers, creating job opportunities and thus improving the living standards of citizens precisely the United States of America. Through the agreement, the trade has also dragged into existence other trade negotiations opening up ways for marketability, investments, dispute resolutions among member countries, environmental concerns and working terms. For the research, the paper aims at demystifying the conditions and the elements of the treaty about the security of the United States. Besides, it also aims at finding out the recommendations for changing the pact to a universal benefit to not only the United States but also the international fraternity (Villareal, 2017).
Benefits of the Treaty to the US.
In respect to the United States, the trade was not only to create links but to accrue social, economic and political benefits. Regarding the treaty, about 65% of the US agricultural goods exported to Mexico will be granted duty-free taxation within five years or immediately depending on the considerations. The rationale for the tax exemption was to increase the industrial, agricultural goods from the USA to Mexico which was a great benefit to the US government. Second, the US vehicles and autos will have easier access to Mexico. The Mexican government to lower the tariffs on the American autos and probably within five years the duties on the American products to Mexico would be done away with to make it (Rioux et al. 2015).
Besides, trade embargoes quotas inclusive on the exports like textile to Mexico would be eliminated with immediate effect and the $700 million restrictions done away with within six years. However, overall, the whole restrictions imposed on the American produces to Mexico to be eliminated. The domestic content of Mexico principles to be stopped in order to allow usage of the US products. For instance, the US companies that existed in Mexico were to be given the same treatment and credits just like the Mexican industries. Furthermore, the disbanded Mexican financial corporations were to be raised, and the American financial institutions would be let to create total allowances.
NAFTA as a comprehensive body has created a conducive environment for trade among USA, Mexico and Canada with the aim of reducing or removing at all, the trade barriers, for example, the import legalisations. The provision has boosted the USA to export freely to the countries; Canada and Mexico. The US government have always been allowed to transact businesses in these two countries without coercive measures. The US traders are given equal treatment just like the traders in Canada and Mexico (Villareal, 2017). It has been a way of promoting mutual business atmosphere among the three countries. One of the highly significant condition was for the US traders and the government to be given the authority and advantage over her technology. It has, however, given the USA an upper hand in making huge profits as compared to the other two countries; Canada and Mexico. The pact also allowed the USA to transact and operate vast and profitable businesses within these two countries by signing tender contracts.
As documented in the agreement made in 1998, the USA-Canada free trade treaty provided that all the contracts between the two, will be duty- free. The American industrial goods will be freely exported to Canada. The same happened with Mexico’s case where all the products imported from the USA were to be tax-free.
All the tariffs imposed on the goods before the formation of NAFTA were done away with. Within five years, USA a good percentage of the US exports to Mexico would be free from tax. After the implementation, USA gained many profits from these tax exemptions, especially on the import charges. The pact further eliminated other trade embargoes like the local contents, local marketing and export effectiveness qualifications that deterred the USA from the benefits. The prior provision on the permission to sell goods with a subscription of a coercive percentage was eliminated too by the pact.
NAFTA despite having opened links to trade through the creation of a suitable business environment, it has not been effective in some areas. Therefore, there exist some recommendations to make it an effective and accommodative pact to not only the trio but to the international community. One of the proposed recommendations is the modernisation concerning the technological improvements. In the past, businesses were always being narrowed within a manual set up. However, of late, many improvements are in place in a bid to ease the processes. A digital network connecting the whole globe need to be initiated with the aim of opening links for the emerging countries to have a taste of development. The creation will establish an online or rather the internet e-commerce thus leading to increased sales (Rioux et al., 2015). The developing countries can be potential customers to goods from the developed nations. Small enterprises are capable of using the internet as a platform for reaching more consumers and expanding the markets by far. The new trend of e-commerce has bred positive changes and benefits to the pact; hence the recommendation is worth implementation. With the effect in 2015, NAFTA realised large transactions that later provided an avenue for future investments.
Also, NAFTA initiated the expansion of products and companies. For instance, Mexico increased her production eventually investing in some other products. For example, exploitation of crude oil and natural gas, processing and exportation, involving in foreign trade shipping and distributing their goods worldwide, involvement in the production and supply of electricity and lastly the production of minerals and radioactive (Anderson & Yotov, 2016). According to the report made by the American Society, expansion in production lowers the cost and avail more markets to the new product. Thus the US should be able to do away with exceptions done by NAFTA concerning the energy supply.
Finally, it should be noted that NAFTA is a trade agreement and not labour or environmental treaty. However, with time, the treaty came to become too much of environmental and labour-oriented. The US trade agreement in specific should be geared to increasing economic growth and freedom but not of political influence. Environmental and labour initiatives risk the pact of into a different entity altogether. In precision, NAFTA as a treaty has been a conducive environment creating a pact, aimed at eradicating the trade barriers that existed in the markets. It has; therefore, been an integral turning point for the USA, Canada, Mexico and the whole globe as a whole to transact businesses freely without intimidation. Otherwise, for efficient increment in sales and freedom, NAFTA should implement the above-mentioned recommendations, especially in the United States.