NAFTA (North American Free Trade Agreement),a treaty between Canada, Mexico and the United States, being the world’s largest trade agreement, it’s main purpose is to reduce trading costs, increase business investments and help North America be more competitive in the global market place which was done by removing the trade barriers between the three signatory countries.
NAFTA has favoured all the three co-signers by eliminating tariffs on imports and exports between the three countries. It created specific rules to regulate trade in farm products, automobiles and clothing. These also apply to some services, such as telecommunications and finance. It also established procedures to resolve trade disputes.
NAFTA has two other agreements that update the original- The North American Agreement on Environmental Cooperation and The North American Agreement on Labor Cooperation .
NAFTA encouraged a more than tripling of regional trade and cross-border investment between the three countries also grew significantly. Yet NAFTA has remained a perennial target in the broader debate over free trade. Debate also persists regarding NAFTA’s legacy on employment and wages, with some workers and industries facing painful disruptions as they lose market share due to increased competition, and others gaining from the new market opportunities that were created.
President Donald J. Trump says the deal has shifted U.S. manufacturing production, and jobs, to Mexico, and in August 2017 his administration reopened negotiations with Canada and Mexico with the aim of reforming it. It was stated that the intention of the negotiations was to support higher-paying jobs in the US and to improve the terms of trade that it had with Canada and Mexico. But the experts have an entirely opposite opinion about the same.
Lately, intense negotiations have been made between the two countries of US and Mexico of which Canada was not a part . On Monday, The President of the States announced that that the United States and Mexico had reached an accord to revise key portions of the North American Free Trade Agreement and would finalize it within days, suggesting he was ready to jettison Canada from the trilateral trade pact if the country did not come on board quickly.
Now, the question becomes whether a trilateral pact becomes a bilateral deal — or Mr. Trump’s threats pressure Canada to return to the negotiating table and accede to many of the United States’ demands.
The president’s apparent willingness to move on without Canada prompted confusion and concern among lawmakers — who said it may not be legally permissible.
The idea of leaving Canada out of the deal was met with universal condemnation. The whole situation right now is very murky.
Donald Trump‘s administration is giving Canada until Friday to sign onto a bilateral trade deal between the U.S. and Mexico or be treated as “a real outsider” against whom punishing riffs on autos will be imposed.
Urgent trade talks have resumed in Washington, this time with Canada at the table,finding itself scrambling to stay a part of the free trade group.A great focus being on dairy products that Canada exports.
With this great pressure tactic imposed by the US on Canada, it’s quite unpredictable what will happen in the coming two days, whether NAFTA will continue or there will come an all new treaty into existence. The only thing that we know for now is that both the situations will significantly influence the world economy. What we can do for now is just wait and watch and let the three countries play their cards!
Written By:
Pranjal Bhandari
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