Trade blocs are increasingly influential in world trade. Nafta is also controversial. Policymakers disagree on whether the benefits of the free trade agreement outweigh its drawbacks. Here they are, you can decide for yourself. Opponents of free trade often say that this encourages companies to travel to countries with poor environmental and labour rules. These measures could potentially lead to systematic labour abuse and environmental destruction. For example, a coal company in the United States could pay a high minimum wage to workers, adopt aggressive safety measures and protect local rivers from pollution. Free trade agreements could allow the mining company to relocate its operations to a country without these rules, which could allow it to reduce costs by endangering workers and the environment. One of the main advantages and objectives of NAFTA was the reduction or total elimination of taxes on imported goods between these three countries. Since 2008, there have been no tariffs on agricultural exports between the United States and Mexico, and many are being eliminated between Canada and Mexico. However, Canada and Mexico continue to tax sugar, eggs, poultry and dairy products. Reduced or eliminated tariffs facilitate trade between these nations. The Trump administration has renegotiated to reduce the trade deficit between the United States and Mexico.
The new agreement amends NAFTA in six important areas. Ultimately, the goal of the economy is to make higher profits, whereas the government`s objective is to protect its people. Neither unrestricted free trade nor total protectionism will achieve this. A mixture of the two, as implemented through multinational free trade agreements, has become the best solution. The North American Free Trade Agreement created the world`s largest free trade area, covering the United States, Canada and Mexico. In 2017, member countries generated about $22.2 trillion in gross domestic product. But from an economic point of view, NAFTA is a success and, without it, the effects of competition from the growing economies of the European Union or China would be worse. This is crucial now that both trade zones are above the United States as the world`s largest economies.
Despite these benefits, the United States, Mexico and Canada renegotiated NAFTA on September 30, 2018. The new agreement is referred to as the agreement between the United States, Mexico-Canada and ratified by the legislative branches of each country.