Benefits of Nafta to Us, Canada and Mexico

NAFTA

NAFTA, The North American Free Trade Agreement, came into force on 1st Jan, 1994, between the United States, Mexico, and Canada. This agreement created the largest free trade area which is believed to have linked over 444 million people, who are producing over $17 trillion worth of goods and services. Studies have shown that the NAFTA has resulted in the increase of US GDP by over .5% per annum. This is possible due to the elimination of taxes and the creation of international rights for investors. It has also resulted in lesser business costs and encouragement of investment and growth of small enterprises. This in turn has reduced inflation by reducing import costs.

NAFTA BENEFITS TO US, MEXICO AND CANADA.

1.Improved agricultural trade:

The two-way agricultural trade between the United States and Mexico increased 10.9% from 2003 to 2004. Similarly the agricultural trade agreement between the United States and Canada increased 8% from 2003 to 2004. In 2004, the export of various vital commodities from US to both the countries set records.

2.Encourages trade and development:

NAFTA has resulted in soaring trade partnerships between United States and its partners. In fact, as of 2007, the goods and services trade with NAFTA was approximately $1.0 trillion, exports were $452 billion, and imports were $568 billion. In 2008, the NAFTA partners were the top two importers of US products. US goods exports to NAFTA increased by 7.2% in 2008 as compared to 2007. The top categories of exports included machinery, vehicle parts, electrical machinery, mineral fuel and oil, and plastics. Commercial private services also showed an increase of 13.2% in 2007 as compared to 2006.

3.Encourages specialization:

This agreement allows each of the NAFTA partner countries to concentrate and specialize in their own products and thereby become more efficient. For instance, in 2008, the NAFTA partner countries were the third largest suppliers of goods to the US. NAFTA accounted...