NAFTA was first introduced in 1979 when soon-to-be president President Ronald Reagan made the idea part of his campaign during the 1980 Presidential race. It was George H.W. Bush who pulled it all together in his first term when Canada and the United States signed the Canada–United States Free Trade Agreement in 1988, and shortly afterward Mexican President Carlos Salinas de Gortari approached Bush to propose a similar agreement in an effort to bring in foreign investment following and involvement in the midst of the Latin American debt crisis. After nearly 2 years of negotiations, the leaders of the three nations signed the agreement in their on December 17, 1992.
The NAFTA agreement is a trade deal made by the United States for the benefit of the United States. Out of the three countries involved in NAFTA the most economical break and easy trade was given to the United States. Although it created jobs and expanded the economy of Mexico and opened more trade routes for Canada, neither of the countries received as much import for as little export as America.
Mexico's overall agricultural exports increased 10% annually between 1994 and 2001, while imports increased by 7% percent a year during the same period. One of the most affected agricultural sectors is the meat industry. Mexico had grown from a largely looked over importer in the pre-1994 U.S. export market to the second largest importer of U.S. agricultural products in 2004, and NAFTA the major “catalyst” for this change. NAFTA “removed the hurdles” that impeded business between the two countries, so Mexico has provided a growing market for meat for the U.S., and increased sales and profits for the U.S. meat industry.
A 2001 Journal of Economic Perspectives found that NAFTA was “a net benefit to Mexico” and by the year 2003, 80% of the commerce in Mexico was exported “only to the U.S.”. These effects were extremely evident in years 2001, 2002 and 2003 as the United states was at the height of its economical growth before the 2008 subprime mortgage recession. In addition ti economical advantage, a 2015 welfare study found that Mexico’s “net welfare” increased by 1.3% as a result of the NAFTA tariff reductions, and that Mexico's intra-bloc trade increased by 118%. Inequality and poverty rates fell in the most “globalization affected regions of Mexico” . 2013 and 2015 studies done by the Review of Developmental Economics show that small-scale Mexican farmers benefitted more from NAFTA than large-scale farmers.
The Congressional Research Service concluded that the "net overall effect of NAFTA on the US economy appears to have been relatively modest, primarily because trade with Canada and Mexico accounts for a small percentage of US GDP.” The US Chamber of Commerce credits NAFTA with increasing U.S. trade in goods and services with Canada and Mexico from $337 billion in 1993 to $1.2 trillion in 2011, while the AFL–CIO blames the agreement for sending 700,000 American manufacturing jobs to Mexico over that time. University of California, San Diego economics professor Gordon Hanson said that “NAFTA helped the US compete against China and therefore saved US jobs”. He then added “While some jobs were lost to Mexico as a result of NAFTA, considerably more would have been lost to China if not for NAFTA”.
In regards to Canada and their endurances, Gordon Laxter, a political economist from Alberta Canada, brought attention to NAFTA’s Article 605 which he states as “energy proportionality rule ensures that Americans have virtually unlimited first access to most of Canada’s oil and natural gas” and Canada cannot reduce oil, natural gas and electricity exports (74% of which is petroleum and 52% is natural gas) to the U.S., even if Canada is experiencing shortages. These provisions forced upon Canada are unfair that a country cannot regulate its own exports to another country. In that 2015 report from the C.R.S., they directly stated:
The net overall effect of NAFTA on the U.S. economy appears to have been relatively modest primarily because trade with Canada and Mexico accounts for a small percentage of U.S. GDP.
However, many American small businesses depend on exporting their products to Canada or Mexico under NAFTA. According to the U.S. Trade Representative, this trade supports over 140,000 small and medium sized businesses in the US.
The Sierra Club in a statement that NAFTA has almost had a negative affect on farming as it has contributed to large-scale export-oriented farming which then led to the increased use of fossil fuels, pesticides and GMO. It (NAFTA) also “encouraged” to environmentally destructive mining practices in Mexico, it (NAFTA) prevented Canada from effectively regulating its tar sands industry, and created new legal avenues for transnational corporations to fight environmental legislation. The “most serious affect overall”increases in pollution due to NAFTA were found in the base metals sector, the Mexican petroleum sector, and the transportation equipment sector in the United States and Mexico, but not in Canada.
According to a New York Times article, in July 2017 the Trump administration provided a detailed list of changes that it would like to see to amended or edited in NAFTA. The underlying theme in this changes was a reduction in the United States' trade deficit. The administration also called for the elimination of provisions that allowed Canada and Mexico to appeal duties imposed by the U.S. and limited the ability of the U.S. to enact import restrictions on Canada and Mexico. Further putting NAFTA into the favor of American trade. The Times quoted economist Chad Bown of the Peterson Institute for International Economics say the Trump administration's list “is very consistent with the president's stance on liking trade barriers, liking protectionism. This makes NAFTA in many respects less of a free-trade agreement”. An October 2017 op-ed in Toronto's The Globe and Mail questioned whether the U.S. wanted to re-negotiate the agreement or planned to walk away from it after its public criticism from Trump.
From June to late August 2018, Canada was left out of all informal summits and negations regarding a new NAFTA as the United States and Mexico held bilateral talks. On August 27th, 2018 Mexico and the United States announced they had reached a bilateral agreement on a “revamped” NAFTA trade deal that included sections and provisions that would increase automobile production in the U.S.. An August 30th article in The Economist, Mexico agreed to increase the amount of 'tariff cuts’ made from 62.5% to 75% of American automobile's components made in Mexico. Since most American automobile manufacturers currently import less expensive components from Asia, under the revised agreement, consumers would pay more for vehicles because of the agreement with Mexico to import Mexican made components.
Canadian Prime Minister, Justin Trudeau and Canadian Foreign, Minister Chrystia Freeland announced that they were willing to join the revised agreement if it was in Canada's interests. Freeland returned from her European diplomatic tour early, cancelling a planned visit to Ukraine, to participate in NAFTA negotiations in Washington, D.C. in late August. According to an August 31st Canadian Press release published in the Ottawa Citizen, key issues under debate included supply management, pharmaceuticals, cultural exemption, among more topics.
Although President Trump warned Canada on September 1 that he would exclude them from a new trade agreement unless Canada “submitted” to his demands; however, it is not clear that Trump has the authority to do so without the approval of Congress. According to the C.R.S. report published on July 26, 2018, it is likely that congressional approval to make substantive changes to NAFTA would have to be secured by President Trump before the changes could be implemented.
On September 30, 2018, the day of the deadline for the Canada & U.S. negotiations, a preliminary deal between the two nations was reached thus preserving the trilateral agreement when the Trump administration submits the agreement before Congress in a to-be-announced date. NAFTA will now be referred to as "United States-Mexico-Canada Agreement" (USMCA).
The 30 something studies, journal entries, articles and reports all found that NAFTA’s overall net benefit to the United States.