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trade facilitation by North America Free Trade Agreement

Published on 8 February 2017 in News - Pages by Raffick Marday

Impacts of trade facilitation by North America Free Trade Agreement.

North American Free Trade Agreement, NAFTA is a three-state trading front consisting of Canada, Mexico, and the United States. The agreement, dating back in the year 1994, has seen the three countries go through tremendous economic developments by the implementation of the policies and terms of the agreement. Economists agree that just in the past two decades of signing the agreement, regional trade has increased sharply from $290 billion in 1996 to more than $1.4 trillion in 2016. Consequently, this has boosted the cross-border investments. For example, US direct investment in Mexico has increased from $1.5 billion to over $100 billion as at the year 2015.
Being members of the front has made Canada and Mexico become of the largest destinations for United States exports. In fact, they account for more than one-third of total U.S exports. This has directly impacted on Annual United States GDP growth by a whole 0.5%. The upsides of the trade between the countries which had a particular focus on auto and other industrial manufacturing. Consequently, there has been the movement of funds, both directly in the form of tangible goods and indirectly as services.

Additionally, it is worth noting that there had been over 17million jobs that have been created because of the good trade relations between the three countries. On average, these jobs pay more than over 20% of what other non-trade related job offers, thanks to the NAFTA pact. Evidently, labour transfer from one country to another in the block has made any monetary exchange to be more efficient between the member states.

Despite the fact, all has not been smooth in the recent years. Some economic critics in the United States argue that this transfer of funds in the form of labour exchange is to blame for the increase in loss of wage labour for U.S citizens. Economy Policy Institute estimated that NAFTA has led to a loss of up to 680,000 U.S jobs in the years the treaty has been in play. This has left speculations on how this new revelation will be factored in the trading agreement and its potential impacts it holds.
Amidst this confusion on the emerging issues, there are other critics who stand to the fact that wage stagnation and decline that is being experienced is due to the US moving most of its Production to Mexico to lower the cost of productions.

Canada has also received its fair share from the trading agreement and could not be any more thankful. Trade between Canada, US and Mexico has soared, more so after the wake of Canadian liberalisation. The total exports from the country fetch an annual amount of $388 billion, while its imports from the other countries which had increased by almost the same amount. Despite the fact that Canada had feared stagnation of growth in the manufacturing sector by joining the trade, it clearly does not regret taking the step. However, its manufacturing productivity has remained at 68.5% of what the United States received.

Generally, it can be agreed upon that the trade agreement has boosted the economic development in all the three countries. The protocol of implementation of the policies has facilitated most of the customs compliance enabling effective monetary transfer and exchange.

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