O Naphtha – acronym in English for North American Free Trade Agreement – it is an economic block composed of U.S, Mexico and Canada. Founded on January 1, 1994, it followed one of the trends in the Globalization process: the organization of countries into regional agreements. As in other economic blocks, NAFTA aims to promote trade integration between its member countries, which is done through, above all, the reduction of tariffs. customs.
In addition to following an international trend, the creation of NAFTA was also made due to competition in world trade by other economic blocs, especially the European Union it's the Mercosur. In this way, an integrated commercial dynamic is established between the three countries that also participate, together, in another regional agreement in the process of development: the APEC (Asia-Pacific Economic Cooperation).
Among NAFTA's characteristics, the one that stands out the most is the high economic inequality among its member countries. The US, the world's largest economy, wields unparalleled influence over its neighbors who are members of the regional agreement in question. The economies of Canada and Mexico are heavily dependent on the US, although these dependency relationships are expressed in different ways. different.
Canada is considered by many as a kind of "territorial extension" of the United States, since this country absorbs almost 80% of its exports, so much so that a large part of the industries located in Canadian territory are located in areas close to the border with the USA. However, it is important to consider that Canada is a developed country, with a high development human and even out of line with the Americans in various positions and perspectives geopolitics.
Mexico, in turn, is also highly dependent on the United States, presenting, however, a great disadvantage in terms of the balance commercial, as its products have less added technology and, therefore, are cheaper than those imported by the neighbor of north. In addition, in Mexico, there is a great internationalization of its industries, given that most of them are of US origin, especially the so-called maquiladoras, which are located in the border areas between the two countries. These factories are a kind of assembler of products whose parts were produced in other parts of the world. They take advantage of the low cost of Mexican labor to reduce production costs, in addition to the proximity between the two countries, which makes transport costs cheaper.
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NAFTA should be considered a strictly economic bloc, that is, integration between countries does not pass through other spheres, as occurs in the European Union. The free movement of people, especially between Mexico and the United States, is unthinkable given the great difference between the quality of life in the two countries. Even so, the number of illegal Mexican migrants in the US is very high, which is not contained even with the creation of a grand wall in the border region between the two countries.
Naphtha Reviews
There are many criticisms linked to the negative aspects of NAFTA, mainly in the internal politics of its member countries. In the Mexican scenario, the criticism is the intensification of the country's economic dependence on the US, in addition to the economic bloc providing a marked negative difference in the trade balance between the two countries. In addition, there is criticism of the large entry of North American products and companies, which, better equipped, promote unfair competition with local products, especially agricultural products.
In the United States, the internal criticism that takes place is also related to the migration of factories in the country towards the other two countries, mainly to the Mexican territory. Thus, many jobs are lost with the departure of national companies to other territories. In Canada, on the other hand, internal complaints are made by the country's increased economic dependence on the United States, in addition to considering that NAFTA works as a limiting effect on the commercial performance of Canadians in other parts of the world.
Unions and workers protest against NAFTA in Washington, capital of the USA*
Despite all these criticisms, the positive aspects of NAFTA must be highlighted: the growth of Mexican economy, greater trade integration between member countries and the generation of more jobs in work. On the US side, NAFTA is considered advantageous due to the increase in the consumer market for its products industrialized and the consequent increase in the profits of their companies, which increased revenue and decreased their spending.
* Image credits: Joseph Sohm / Shutterstock
By Me. Rodolfo Alves Pena
The North American Free Trade Agreement (NAFTA) is an economic bloc formed by three countries in North America, they are:
a) United States, Chile and Brazil.
b) Canada, Cuba and Mexico.
c) Argentina, Canada and the United States.
d) Mexico, Canada and the United States.
What are the main objectives of the North American Free Trade Agreement (NAFTA)?
