History of the North American Free Trade Agreement
March 27th, 2009. Published under World Affairs. No Comments.
The North American Free Trade Agreement (abbreviated as NAFTA) is a trading agreement between Canada, the United States, and Mexico. The agreement was originally spearheaded by President George H.W. Bush, Canadian Prime Minister Brian Mulroney, and Mexican President Carlos Salinas. These three leaders signed the agreement ceremonially in Santa Fe, TX on December 17, 1992.
However, this signing did not make the law binding; each individual parliamentary or legislative body had to ratify the agreement to make it binding. This occurred in the U.S. on November 17, 1993. President Bill Clinton then signed it on December 8, 1993 so that NAFTA went into legal effect January 1, 1994. NAFTA is an important example of a free trade agreement.
Free trade agreements are a way to make the markets of nations within the agreement more accessible to each other. Normally exporting goods to a foreign market means that tariffs will be applied to the goods in order to protect the domestic market from being overrun by foreign imports. This is an obvious deterrent. A free trade agreement redresses this problem by dropping tariff penalties for those countries involved in the trade agreement.
This results in relatively painless access to the formerly penalized market allowing each country to export their prize goods and not have to worry about losing profit to tariffs. The creation of free trade agreements is based on the ideology of globalization.
Globalization affects more than simply economics, but its principles apply particularly well to an economic discussion. Globalization is the figurative and literal removal of barriers between countries. It promotes a move from isolation to making the world smaller by increasing communication of ideas, goods and services across borders. Ideally globalization would result in the nations of the world reaping the most benefit from each other.
For example, let’s suppose that Country X produces quality cars that are less expensive to produce than anywhere else. Country Y however produces far more produce that Country X. As an exchange for the manufactured cars, Country Y exports their produce heavily to Country X. In this example both countries benefit. However, reality is far more complex than this contrived situation.
Many actually seek to prevent globalization as they see large multi-billion dollar companies wreaking havoc in under developed countries by placing their factories there, displacing pastoral lands, and disrupting local economies. Others support it indirectly in places like Harlingen, TX where NAFTA has made it a center of growth because of its proximity to the US-Mexican border.
Texas economic development has sky rocketed in that area because of NAFTA’s effects. However, just because one population center has benefited isn’t enough justification for many who feel that the negative consequences of globalization outweigh the benefits it provides.
The Harlingen Economic Development Corporation, or DCNC - Harlingen EDC of Harlingen, TX is at the forefront of Texas Economic Development.