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The
North American Free Trade Agreement or better known as NAFTA is a treaty
between Canada, Mexico and the United States of America. More than 30 years ago
bilateral negotiations between Canada and the United states resulted in the
US-Canada Free Trade Agreement which became law in the beginning of 1989. It
wasn’t until 1991 where the US began bilateral talks with Mexico, which Canada
later joined. Commencing on January 1, 1994 NAFTA eliminated duties and
quantitative restrictions in a progressive fashion on all products (with the
exception of only a few) culminating in 2008.

NAFTA marks the first time in history where
two developed nations signed a treaty with an emerging market county. (Amadeo,
2017) The biggest problem with the NAFTA agreement is it allows for the out
sourcing of jobs to a lower labor cost Mexico market and workers who stay in
those markets are devalued and have to accept lower wages. Another issue with
NAFTA is that Mexico is a known maquiladora supported country. Maquiladora is a
manufacturing process where raw materials are sourced duty and tariff free for
manufacturing.

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This is not to say that all aspects of NAFTA
are necessarily bad. As in all agreements, there are winners and losers on both
sides of the agreement. Some positives of NAFTA were that as it came into
effect, there was a surge in investment levels across North America which
allowed for a stronger economy and growth, job creation (although this is debatable),
competitive prices on imported goods along with better selection. From the
business side of the coin, it allowed for businesses to have greater access to
raw materials, new technologies, capital and labor resources.

While the total GDP of NAFTA is around 20
Trillion dollars, as we head into 2018 it is a foggy outlook in knowing how
recent renegotiations are going affect all 3 markets in the future. As threats
of the US pulling out of the agreement in favor of a better deal for the
American worker, Mexico and Canada not taking the threat seriously and refusing
to negotiate in a meaningful way, the future outcome for the agreement ahead is
up in the air. In general, the consensus is that NAFTA ultimately does hurt
American workers and needs to be renegotiated for a better deal.

 

Australia New Zealand Closer Economic
Agreement or ANZCERTA, considered on of the most successful free trade
agreements came into effect in 1983. It has been recognized by the World Trade
Organization is an ideal agreement for admiration. (Austrade.gov.au,
2017)

ANZCERTA removes all tariffs and import
restrictions, minimize market barriers, standardizes food standards resulting
in much lower compliance costs, bilateral recognition of goods and occupations
by removing barriers and impediments for skilled labor, and the reduction of
compliance costs for investors. Under this agreement the agreement has resulted
in an average of +6.6 % growth per year between the countries and has continued
that trend for nearly 35 years.

 

Central European Free Trade Agreement (CEFTA)
is a trade agreement between Albania, Bosnia and Herzegovina, Macedonia,
Montenegro, Serbia, Kosovo, Bulgaria, Croatia, Czech Republic, Moldova, Romania
and Slovakia but CEFTA membership ended Bulgaria, Croatia, Czech Republic,
Hungary, Poland, Romania, Slovakia and Slovenia when they became members of the
European Union. Originally enacted in December of 1992 it was officially
enforced in 1994. Its purpose was to help these countries integrate in western
European institutions with the final goal of using democracy and free market
forces to help them join European political, economic and legal systems.

This trade agreement is considered a stepping
stone for any country that is wanting to join the European Union as it services
as a form of preparation for membership.

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