NAFTA (1994-2018)
NAFTA, which stands for North American Free Trade Agreement, is an agreement that was formed between all three North American countries. The idea was first announced back in 1979 by then-president Ronald Reagan. It didn’t happen then and led to the creation of CUSFTA instead. It first started when Mexico had a debt crisis and was seeking ways to reduce and deal with their debt. After some effort like joining the GATT, Mexican leader, Salinas, decided to approach U.S. president George H.W. Bush, to introduce the idea of a free trade agreement. When Canada learned of this, it was afraid of having trade and investment directed away from itself and lose it to Mexico and U.S. if they joined together so it requested to join in the negotiations to have some kind of control over any results this deal may bring.
This deal turned out to be a successor of CUSFTA; it had many of the same regulations and policies of CUSFTA so the major change was that Mexico was added to the deal; but some elements were looked and revised.
For example the Local content requirement for auto industries required that 50% of car parts had to originate from a North American country to qualify for duty-free trade but now it has changed to 62.5%. (Local content requirement means that certain items have to have its pieces originate from a specific country in order for it to have some kind of benefit. Usually these are placed to discourage people from going abroad to produce products, and, in turn, it encourages local labor).
Nafta has created some good and bad for U.S. & Canada. Trump feels as though NAFTA has really caused a big loss for America and has requested to make some changes to this deal. The reason why he feels NAFTA is bad is because it puts American farmers at a disadvantage because Canada has strict regulations on their dairy products. America has also experienced major job losses due to big industries such as auto, textile, computer have moved their production facilities to Mexico to benefit from low-cost labor. Now after many negotiations and meetings, the three countries have agreed on another trade agreement that replaces NAFTA, discussed on the next page “USMCA”.