NAFTA faces new challenges

(File photo) Carpenters Lorenzo Hernandez, left, and Jeronimo Hernandez, both from Mexico City, work on the construction of a Holiday Inn Hotel in the border town of Nuevo Laredo in northern Mexico.

(File photo) Carpenters Lorenzo Hernandez, left, and Jeronimo Hernandez, both from Mexico City, work on the construction of a Holiday Inn Hotel in the border town of Nuevo Laredo in northern Mexico.

Published Dec 31, 2013

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Mexico City - The North American Free Trade Agreement among the United States, Mexico and Canada marked the first time that two industrialized countries were tied to a developing country in a trade agreement.

When it took effect on January 1, 1994, NAFTA forged what at the time was the world's largest free trade zone. The pact has stimulated trade in the region, which has tripled to more than 1 trillion dollars annually.

“That's 3 billion dollars a day,” US Commerce Secretary Penny Pritzker said in an October interview with California radio station KPBS. Pritzker said she was not concerned with areas where NAFTA might have fallen short but rather “the opportunities for us to grow the relationship between our three countries.”

More than 460 million people live in the three countries. Mexico sells more than 80 per cent of its exports to the United States and Canada. The US exports more goods to Mexico alone than to China, Brazil, India and Russia combined. In the US an estimated 6 million jobs depend on trade with Mexico.

But the free trade agreement was hotly debated in the beginning.

The first president George Bush signed the agreement in 1992 but lost his re-election bid that year to Bill Clinton, who took office and won ratification of the treaty in Congress - but only with help from the opposition Republican Party over hefty objections within his own Democratic Party.

Unions closely aligned with the party feared a massive transfer of jobs to Mexico, where wages are lower. That has not occurred.

In Mexico, NAFTA opposition came largely from farmers who feared the liberalization of agricultural markets.

Joy Olson of the Washington Office on Latin America, a think tank, said that there were winners and losers with NAFTA, as in all trade agreements.

Small- and medium-sized farms in Mexico have suffered pressure to compete with US agriculture enterprises.

Mexico is a net importer of agricultural products today, and larger companies have been able to profit from the free movement of goods.

US Secretary of State John Kerry recently praised NAFTA for achieving a big step forward in lifting the combined wealth of the hemisphere.

Michael Shifter of the Inter-American Dialogue, another think tank, gives NAFTA an overall positive assessment.

Trade has picked up considerably, and while NAFTA has not entirely solved Mexican poverty, that was never the goal.

While in the mid 1990s the focus of NAFTA members was on their immediate neighbours, today they are looking for new partners and have set their sights on Europe and the Asia-Pacific region.

Canada and Mexico already have reached free trade agreements with the European Union, and the US is negotiating with Brussels. All three are in talks aimed a Trans-Pacific Partnership (TPP), a US-led free trade zone. - Sapa-dpa

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