NAFTA: Part 1

By Reid Offers

 

Long before the time of the twenty-four hour news cycles that currently consume mainstream media and alike, the North American continent was a very different place both economically and politically. Seething at the mouth to get back to being the world stage’s main performer, the American public elected a new president on the Republican Party ticket, Ronald Reagan, in a landslide winning the vote in forty-six of the fifty states of the 1980 presidential election. Around the same time, Canada was in the process of passing the Constitution Act of 1982 to be fully patriated from the British Parliament, effectively giving Canada full sovereignty as a nation. Likewise, our neighbor to the far south, Mexico, was going through an economic crisis of their own and the country’s governing party decided it was time to liberalise their economic policies and seek more open trade policies.

 

CUSFTA

Right around the era of the hit movie “Dirty Dancing” starring Patrick Swayze and Jennifer Grey, Canada and the United States entered into a precursor to NAFTA called the “Canada-United States Free Trade Agreement,” or CUSFTA, in the late 1980s. Unlike the current platform of anti-globalisation maintained by the Republican Party today, the Reagan administration spearheaded the negotiations of CUSFTA and started to open American economic policy to global investment and free trade. John Turner, leader of the Liberal Party of Canada at the time of the negotiations, was strongly against the signing of the agreement saying he would “tear it up” if he ever got into power. Politics aside, the two countries finalised the agreement with the objectives of eliminating trade barriers between the two countries, creating conditions of fair competition, and liberalizing conditions for investment. The trade agreement between the two countries was implemented successfully on January 1, 1989.

 

Mexico Joins the Party

Following the signing of CUSFTA and the 1988 presidential election of George H.W Bush, Mexican President Carlos Salinas de Gortari sent delegation to Washington D.C with hopes of entering into a free-trade agreement with the United States. At first, Prime Minister Mulroney was reluctant to join the negotiations because of the relatively low levels of trade occurring between Canada and Mexico; however, to avoid entering into separate agreements with the two countries, Mulroney finally decided to join the negotiating table. A little more than a year later, the leaders of the three countries came to a consensus and signed the North American Free Trade Agreement or NAFTA in 1992. With all the parties in harmony, the agreement was ratified by all three legislatures in 1993. NAFTA sought the purpose of eliminating trade barriers, increasing investment, and providing protection to intellectual property.

 

NAFTA in 2018

Since the implementation of the agreement, all three of the countries’ economies have grown significantly. Canada’s exports of goods and services grew to 44% of its total GDP in 2000. In 2015, 78% of Canada’s total exports were all sent to the United States and Mexico. Since 1993, there has been over $1 trillion of merchandise exchanged in North America alone because of the agreement. Trade between Canada and Mexico has grown to eight times what it was before. Despite all of these advantages achieved from NAFTA, the administration of President Donald Trump wants Canada and Mexico to come back to the bargaining table to revitalize NAFTA in order to, in his eyes, better benefit the American worker and economy. While talks are currently in progress, the future of the agreement remains up in the air.

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