Understanding NAFTA allows a person or a country to see the benefits and downsides of this agreement.

NAFTA is the product of a general trend toward free trade between North American nations, beginning with the General Agreement on Tariffs and Trade. Spearheaded by President Ronald Reagan, enacted by President George H. W. Bush, and modified by President Bill Clinton, NAFTA has endured a number of changes since it was first officially signed in 1992. Despite these changes, which largely appeared inevitable, there was a wide breadth of opposition, primarily in the United States and Canada. Concerns included a debilitated labor force, environmental issues, and reduced sovereignty. Nonetheless, NAFTA was signed due to the fact that the benefits ostensibly outweighed the risks; although some sectors may have suffered, overall economic growth was all but a certainty, and the establishment of a unified North American economy was imperative in the wake of manifesting globalization.

What is NAFTA and Why Does It Matter?

NAFTA is comprised of 22 chapters that outline every guideline that each country is to follow following.

The enactment of North American free trade. While these chapters cover what seems to be every conceivable aspect of transcontinental trade, various annexations have been applied since 1993, when it came into effect. These annexations address issues such as environmental concerns, exceptions, and supplementations for dynamics that were previously overlooked (such as the separation of state/provincial and federal governments).

Over 30 organizations are directly related to the history of NAFTA. Primary to these institutions is the NAFTA

Secretariat, which encompasses a panel that conducts dispute settlement. Other organizations include those that are specific to each country’s trade policies and particular aspects of the NAFTA composition, such as the Commission for Environmental Cooperation or the Commission for Labor Cooperation.

Is NAFTA a Good Thing?

Whereas many agree that NAFTA is largely beneficial, some say that it has reduced the number of available jobs in some sectors, diminished the viability of small business in some sectors, and contributed to an overall economic imbalance between the three countries. Nonetheless, various analysts have touted the benevolence NAFTA. Benefits include improved overall GDP for North America, more jobs that are available, increased transparency between nations, increased exports, and others.

Alternately, there have been some issues that have resulted from NAFTA. For example, threats to the Canadian water supply and ecosystem, the loss of jobs in certain important sectors, and various disregarded NAFTA violations by all three countries have often been cited in criticisms. Overall, it is clear that NAFTA is an imperfect legislation, but in the nearly twenty years of its tenure, it certainly has not resulted in the general economic melt-down so many have insisted was imminent. In fact, as world trade continues to evolve and other nations merge their economies into larger entities, it was likely essential.