NAFTA AT 15

Source: Exec Digital Canada

Date :10/04/2008 00:36:08

Election campaigning has highlighted NAFTA’s propensities to divide society and act as a focus for economic and political disaffection. Exec looks at NAFTA fifteen years on.

Written by John O’Hanlon

By strengthening the rules and procedures governing trade and investment on this continent, the North American Free Trade Agreement (NAFTA) has allowed trade and investment flows in North America to skyrocket. According to figures of the International Monetary Fund, total trade among the three NAFTA countries has more than doubled, passing from $306 billion in 1993 to almost $621 billion in 2002.

That’s $1.2 million every minute. This is probably a good time to take a look at the world’s largest and most successful free trade agreement, which celebrated its 15th birthday on January 1, the day when the last few remaining trade restrictions on a handful of agricultural commodities and certain horticultural products were removed.

NAFTA is held up as an outstanding demonstration of the rewards to outward-looking countries that implement policies of trade liberalization as a way to increase wealth and improve competitiveness. It is, its supporters say, an example of the benefits that all countries could derive from moving forward with multilateral trade liberalization. Farmers, workers and manufacturers benefit from the reduction of arbitrary and discriminatory trade rules while consumers enjoy lower prices and more choices.

A time of growth

Though experts continue to disagree over the extent to which any expansion is directly attributable to NAFTA, there’s no question that trade relations between Canada, Mexico, and the United States have broadened substantially since January 1994 when it was launched. According to the office of the US Trade Representative (USTR), from 1993 to 2007, trade among the NAFTA nations more than tripled, from $297 billion to $930 billion, and business investment in the United States has risen by 117 percent since 1993, compared to a 45 percent increase between 1979 and 1993. Inter-NAFTA trades now accounts for more than 80 percent where Canada and Mexico are concerned, and more than a third of the United States’ trade is with these major partners.

Speaking in 2006, with most of NAFTA’s transitional implementation periods already completed, John Melle of the USTR announced that Mexico had passed Japan to become second only to Canada as a trading partner and export market. And there had been a significant change in the nature of that trade; in the 1980s, 80 percent of Mexico’s exports were oil and raw materials. Today, value-added manufactured goods account for 90 percent of Mexico’s exports. Canadian investment in Mexico has surged to about $5 billion, 20 times what it was in 1990. Canadian investment in the US more than tripled to $198 billion from 1990 to 2003. And US investment in Canada soared 150 percent to $215 billion.

The Canadian government, like those of its partners, is upbeat, saying the economy has grown by an average of 3.4 percent annually and generated 2.5 million jobs since NAFTA came in…

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