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Back row, left to right: Mexican President Carlos Salinas de Gortari, U.S. President George H. W. Bush, and Canadian Prime Minister Brian Mulroney, at the initialing of the draft North American Free Trade Agreement in October 1992. In front are Mexican Secretary of Commerce and Industrial Development Jaime Serra Puche, United States Trade Representative Carla Hills, and Canadian Minister of International Trade Michael Wilson.

Following diplomatic negotiations dating back to 1990, the leaders of the three nations signed the agreement in their respective capitals on December 17, 1992.[17] The signed agreement then needed to be ratified by each nation's legislative or parliamentary branch.

Ratification

Canada

The earlier Canada–United States Free Trade Agreement had been controversial and divisive in Canada, and featured as an issue in the 1988 Canadian election. In that election, more Canadians voted for anti-free trade parties (the Liberals and the New Democrats), but the split of the votes between the two parties meant that the pro-free trade Progressive Conservatives (PCs) came out of the election with the most seats and so took power. Mulroney and the PCs had a parliamentary majority and easily passed the 1987 Canada–US FTA and NAFTA bills. However, Mulroney was replaced as Conservative leader and prime minister by Kim Campbell. Campbell led the PC party into the 1993 election where they were decimated by the Liberal Party under Jean Chrétien, who campaigned on a promise to renegotiate or abrogate NAFTA. Chrétien subsequently negotiated two supplemental agreements with Bush, who had subverted the LAC[18] advisory process[19] and worked to "fast track" the signing prior to the end of his term, ran out of time and had to pass the required ratification and signing of the implementation law to incoming president Bill Clinton.[20]

United States

Before sending it to the United States Senate Clinton added two side agreements, the North American Agreement on Labor Cooperation (NAALC) and the North American Agreement on Environmental Cooperation (NAAEC), to protect workers and the environment, and to also allay the concerns of many House members. The U.S. required its partners to adhere to environmental practices and regulations similar to its own.[citation needed] After much consideration and emotional discussion, the U.S. House of Representatives passed the North American Free Trade Agreement Implementation Act on November 17, 1993, 234–200. The agreement's supporters included 132 Republicans and 102 Democrats. The bill passed the Senate on November 20, 1993, 61–38.[21] Senate supporters were 34 Republicans and 27 Democrats. Republican Representative David Dreier of California, a strong proponent of NAFTA since the Reagan Administration, played a leading role in mobilizing support for the agreement among Republicans in Congress and across the country.[22][23]

Clinton signed it into law on December 8, 1993; the agreement went into effect on January 1, 1994.[24][25] At the signing ceremony, Clinton recognized four individuals for their efforts in accomplishing the historic trade deal: Vice President Al Gore, Chairwoman of the Council of Economic Advisers Laura Tyson, Director of the National Economic Council Robert Rubin, and Republican Congressman David Dreier.[17] The signed agreement then needed to be ratified by each nation's legislative or parliamentary branch.

Ratification

Canada

The earlier Canada–United States Free Trade Agreement had been controversial and divisive in Canada, and featured as an issue in the 1988 Canadian election. In that election, more Canadians voted for anti-free trade parties (the Liberals and the New Democrats), but the split of the votes between the two parties meant that the pro-free trade Progressive Conservatives (PCs) came out of the election with the most seats and so took power. Mulroney and the PCs had a parliamentary majority and easily passed the 1987 Canada–US FTA and NAFTA bills. However, Mulroney was replaced as Conservative leader and prime minister by Kim Campbell. Campbell led the PC party into the 1993 election where they were decima

The earlier Canada–United States Free Trade Agreement had been controversial and divisive in Canada, and featured as an issue in the 1988 Canadian election. In that election, more Canadians voted for anti-free trade parties (the Liberals and the New Democrats), but the split of the votes between the two parties meant that the pro-free trade Progressive Conservatives (PCs) came out of the election with the most seats and so took power. Mulroney and the PCs had a parliamentary majority and easily passed the 1987 Canada–US FTA and NAFTA bills. However, Mulroney was replaced as Conservative leader and prime minister by Kim Campbell. Campbell led the PC party into the 1993 election where they were decimated by the Liberal Party under Jean Chrétien, who campaigned on a promise to renegotiate or abrogate NAFTA. Chrétien subsequently negotiated two supplemental agreements with Bush, who had subverted the LAC[18] advisory process[19] and worked to "fast track" the signing prior to the end of his term, ran out of time and had to pass the required ratification and signing of the implementation law to incoming president Bill Clinton.[20]

United States

Before sending it to the United States Senate Clinton added two side agreements, the North American Agreement on Labor Cooperation (NAALC) and the North American Agreement on Environmental Cooperation (NAAEC), to protect workers and the environment, and to also allay the concerns of many House members. The U.S. required its partners to adhere to environmental practices and regulations similar to its own.[citation needed] After much consideration and emotional discussion, the U.S. House of Representatives passed the North American Free Trade Agreement Implementation Act on November 17, 1993, 234–200. The agreement's supporters included 132 Republicans and 102 Democrats. The bill passed the Senate on November 20, 1993, 61–38.[21] Senate supporters were 34 Republicans and 27 Democrats. Republican Representative David Dreier of California, a strong proponent of NAFTA since the Reagan Administration, played a leading role in mobilizing support for the agreement among Republicans in Congress and across the country.[22][23]

Clinton signed it into law on December 8, 1993; the agreement went into e

Clinton signed it into law on December 8, 1993; the agreement went into effect on January 1, 1994.[24][25] At the signing ceremony, Clinton recognized four individuals for their efforts in accomplishing the historic trade deal: Vice President Al Gore, Chairwoman of the Council of Economic Advisers Laura Tyson, Director of the National Economic Council Robert Rubin, and Republican Congressman David Dreier.[26] Clinton also stated that "NAFTA means jobs. American jobs, and good-paying American jobs. If I didn't believe that, I wouldn't support this agreement."[27] NAFTA replaced the previous Canada-US FTA.

NAFTA (TLCAN in Spanish) was approved by the Mexican Senate on November 22, 1993, and was published in the Official Gazette of the Federation on December 8, 1993.[28]

The decree implementing NAFTA and the various changes to ac

The decree implementing NAFTA and the various changes to accommodate NAFTA in Mexican law was promulgated on December 14, 1993, with entry into force on January 1, 1994.[28]

The goal of NAFTA was to eliminate barriers to trade and investment between the U.S., Canada and Mexico. The implementation of NAFTA on January 1, 1994, brought the immediate elimination of tariffs on more than one-half of Mexico's exports to the U.S. and more than one-third of U.S. exports to Mexico. Within 10 years of the implementation of the agreement, all U.S.–Mexico tariffs were to be eliminated except for some U.S. agricultural exports to Mexico, to be phased out within 15 years.[29] Most U.S.–Canada trade was already duty-free. NAFTA also sought to eliminate non-tariff trade barriers and to protect the intellectual property rights on traded products.

Chapter 20 provided a procedure for the international resolution of disputes over the application and interpretation of NAFTA. It was modeled after Chapter 69 of the Canada–United States Free Trade Agreement.[30]

NAFTA is, in part, implemented by Technical Working Groups composed of government officials from each of the three partner nations.[31]

Intellectual property

The North American Free Trade Agreement Implementation Act made some changes to the copyright law of the United States, foreshadowing the Uruguay Round Agreements Act of 1994 by restoring copyright (within the NAFTA nations) on certain motion pictures which had entered the public domain.[32][33]

Environment

The Clinton administration negotiated a side agreement on the environment with Canada and Mexico, the North American Agreement on Environmental Cooperation (NAAEC), which led to the creation of the Commission for Environmental Cooperation (CEC) in 1994. To alleviate concerns that NAFTA, the first regional trade agreement between a developing country and two developed countries, would have negative environmental impacts, the commission was mandated to conduct ongoing ex post environmental assessment,[34] It created one of the first ex post frameworks for environmental assessment of trade liberalization, designed to produce a body of evidence with respect to the initial hypotheses about NAFTA and the environment, such as the concern that NAFTA would create a "race to the bottom" in environmental regulation among the three countries, or that NAFTA would pressure governments to increase their environmental protections.[35] The CEC has held[when?] four symposia to evaluate the environmental impacts of NAFTA and commissioned 47 papers on the subject from leading independent experts.[36]

Labor

Proponents of NAFTA in the United States emphasized that the pact was a free-trade, not an economic-community, agreement.[37] The freedom of movement it establishes for goods, services and capital did not extend to labor. In proposing what no other comparable agreement had attempted--to open industrialized countries to "a major Third World country"[38]--NAFTA eschewed the creation of common social and employment policies. The regulation of the labor market and or the workplace remained the exclusive preserve of the national governments.[37]

A "side agreement" on enforcement of existing domestic labor law, concluded in August 1993, the North American Agreement on Labour Cooperation (NAALC)[39], was highly circumscribed. Focused on health and safety standards and on child labor law, it excluded issues of collective bargaining, and its "so-called [enforcement] teeth" were accessible only at the end of "a long and tortuous" disputes process".[40] Commitments to enforce existing labor law also raised issues of democratic practice.[37] The Canadian anti-NAFTA coalition, Pro-Canada Network, suggested that guarantees of minimum standards would be "meaningless" without "broad democratic reforms in the [Mexican] courts, the unions, and the government".[41] Later assessment, however, did suggest that NAALC’s principles and complaint mechanisms did "create new space for advocates to build coalitions and take concrete action to articulate challenges to the status quo and advance workers’ interests".[42]

Agriculture

From the earliest negotiation, agriculture was a controversial topic within NAFTA, as it has been with almost all free trade agreements signed within the WTO framework. Agriculture was the only section that was not negotiated trilaterally; instead, three separate agreements were signed between each pair of parties. The Canada–U.S. agreement contained significant restrictions and tariff quotas on agricultural products (mainly sugar, dairy, and poultry products), whereas the Mexico–U.S. pact allowed for a wider liberalization within a framework of phase-out periods (it was the first Chapter 20 provided a procedure for the international resolution of disputes over the application and interpretation of NAFTA. It was modeled after Chapter 69 of the Canada–United States Free Trade Agreement.[30]

NAFTA is, in part, implemented by Technical Working Groups composed of government officials from each of the three partner nations.[31]

The North American Free Trade Agreement Implementation Act made some changes to the copyright law of the United States, foreshadowing the Uruguay Round Agreements Act of 1994 by restoring copyright (within the NAFTA nations) on certain motion pictures which had entered the public domain.[32][33]

Environment

The Clinton admin

The Clinton administration negotiated a side agreement on the environment with Canada and Mexico, the North American Agreement on Environmental Cooperation (NAAEC), which led to the creation of the Commission for Environmental Cooperation (CEC) in 1994. To alleviate concerns that NAFTA, the first regional trade agreement between a developing country and two developed countries, would have negative environmental impacts, the commission was mandated to conduct ongoing ex post environmental assessment,[34] It created one of the first ex post frameworks for environmental assessment of trade liberalization, designed to produce a body of evidence with respect to the initial hypotheses about NAFTA and the environment, such as the concern that NAFTA would create a "race to the bottom" in environmental regulation among the three countries, or that NAFTA would pressure governments to increase their environmental protections.[35] The CEC has held[when?] four symposia to evaluate the environmental impacts of NAFTA and commissioned 47 papers on the subject from leading independent experts.[36]

Labor

Proponent

Proponents of NAFTA in the United States emphasized that the pact was a free-trade, not an economic-community, agreement.[37] The freedom of movement it establishes for goods, services and capital did not extend to labor. In proposing what no other comparable agreement had attempted--to open industrialized countries to "a major Third World country"[38]--NAFTA eschewed the creation of common social and employment policies. The regulation of the labor market and or the workplace remained the exclusive preserve of the national governments.[37]

A "side agreement" on enforcement of existing domestic la

A "side agreement" on enforcement of existing domestic labor law, concluded in August 1993, the North American Agreement on Labour Cooperation (NAALC)[39], was highly circumscribed. Focused on health and safety standards and on child labor law, it excluded issues of collective bargaining, and its "so-called [enforcement] teeth" were accessible only at the end of "a long and tortuous" disputes process".[40] Commitments to enforce existing labor law also raised issues of democratic practice.[37] The Canadian anti-NAFTA coalition, Pro-Canada Network, suggested that guarantees of minimum standards would be "meaningless" without "broad democratic reforms in the [Mexican] courts, the unions, and the government".[41] Later assessment, however, did suggest that NAALC’s principles and complaint mechanisms did "create new space for advocates to build coalitions and take concrete action to articulate challenges to the status quo and advance workers’ interests".[42]

From the earliest negotiation, agriculture was a controversial topic within NAFTA, as it has been with almost all free trade agreements signed within the WTO framework. Agriculture was the only section that was not negotiated trilaterally; instead, three separate agreements were signed between each pair of parties. The Canada–U.S. agreement contained significant restrictions and tariff quotas on agricultural products (mainly sugar, dairy, and poultry products), whereas the Mexico–U.S. pact allowed for a wider liberalization within a framework of phase-out periods (it was the first North–South FTA on agriculture to be signed).[clarification needed]

Transp

NAFTA established the CANAMEX Corridor for road transport between Canada and Mexico, also proposed for use by rail, pipeline, and fiber optic telecommunications infrastructure. This became a High Priority Corridor under the U.S. Intermodal Surface Transportation Efficiency Act of 1991.

investor-state dispute settlement obligations contained in Chapter 11 of NAFTA.[43] Chapter 11 allowed corporations or individuals to sue Mexico, Canada or the United States for compensation when actions taken by those governments (or by those for whom they are responsible at international law, such as provincial, state, or municipal governments) violated international law.[44]

This chapter has been criticized by groups in the United States,[45] Mexico,[46] and

This chapter has been criticized by groups in the United States,[45] Mexico,[46] and Canada[47] for a variety of reasons, including not taking into account important social and environmental[48] considerations. In Canada, several groups, including the Council of Canadians, challenged the constitutionality of Chapter 11. They lost at the trial level[49] and the subsequent appeal.[50]

Methanex Corporation, a Canadian corporation, filed a US$970 million suit against the United States. Methanex claimed that a California ban on methyl tert-butyl ether (MTBE), a substance that had found its way into many wells in the state, was hurtful to the corporation's sales of methanol. The claim was rejected, and the company was ordered to pay US$3 million to the U.S. government in costs, based on the following reasoning: "But as a matter of general international law, a non-discriminatory regulation for a public purpose, which is enacted in accordance with due process and, which affects, inter alios, a foreign investor or investment is not deemed expropriatory and compensable unless specific commitments had been given by the regulating government to the then putative foreign investor contemplating investment that the government would refrain from such regulation."[51]

In another case, Metalclad, an American corporation, was awarded US$15.6 million from Mexico after a Mexican municipality refused a construction permit for the hazardous waste landfill it intended to construct in Guadalcázar, San Luis Potosí. The construction had already been approved by the federal government with various environmental requirements imposed (see paragraph 48 of the tribunal decision). The NAFTA panel found that the municipality did not have the authority to ban construction on the basis of its environmental concerns.[52]

In Eli Lilly and Company v. Government of Canada[53] the plaintiff presented a US$500 million claim for the way Canada requires usefulness in its drug patent legislation.[54] Apotex is sued the U.S. for US$520 million because of opportunity it says it lost in an FDA generic drug decision.[54]

Lone Pine Resources Inc. v. Government of Canada[55] filed a US$250 million claim against Canada, accusing it of "arbitrary, capricious and illegal" behaviour,[56] because Quebec intends to prevent fracking exploration under the St. Lawrence Seaway.[54]

Lone Pine Resources is incorporated in Delaware but headquartered in Calgary,[56] and had an initial public offering on the NYSE May 25, 2011, of 15 million shares each for $13, which raised US$195 million.[57]

Barutciski acknowledged "that NAFTA and other investor-protection treaties create an anomaly in that Canadian companies that have also seen their permits rescinded by the very same Quebec legislation, which expressly forbids the paying of compensation, do not have the right (to) pursue a NAFTA claim", and that winning "compensation in Canadian courts for domestic companies in this case would be more difficult since the Constitution puts property rights in provincial hands".[56]

A treaty[clarification needed] with China would extend similar rights to Chinese investors, including SOEs.[56]

NAFTA's Chapter 19 was a trade dispute mechanism which subjects antidumping and countervailing duty (AD/CVD) determinations to binational panel review instead of, or in addition to, conventional judicial review.[58] For example, in the United States, review of agency decisions imposing antidumping and countervailing duties are normally heard before the U.S. Court of International Trade, an Article III court. NAFTA parties, however, had the option of appealing the decisions to binational panels composed of five citizens from the two relevant NAFTA countries.[58] The panelists were generally lawyers experienced in international trade law. Since NAFTA did not include substantive provisions concerning AD/CVD, the panel was charged with determining whether final agency determinations involving AD/CVD conformed with the country's domestic law. Chapter 19 was an anomaly in international dispute settlement since it did not apply international law, but required a panel composed of individuals from many countries to re-examine the application of one country's domestic law.[citation needed]

A Chapter 19 panel was expected to examine whether the agency's determination was supported by "substantial evidence". This standard assumed significant deference to the dome

A Chapter 19 panel was expected to examine whether the agency's determination was supported by "substantial evidence". This standard assumed significant deference to the domestic agency. Some of the most controversial trade disputes in recent years, such as the U.S.–Canada softwood lumber dispute, have been litigated before Chapter 19 panels.

Decisions by Chapter 19 panels could be challenged before a NAFTA extraordinary challenge committee. However, an extraordinary challenge committee did not function as an ordinary appeal.[58] Under NAFTA, it only vacated or remanded a decision if the decision involveed a significant and material error that threatens the integrity of the NAFTA dispute settlement system. Since January 2006, no NAFTA party had successfully challenged a Chapter 19 panel's decision before an extraordinary challenge committee.

The roster of NAFTA adjudicators included many retired judges, such as Alice Desjardins, John Maxwell Evans, Constance Hunt, John Richard, Arlin M. Adams, Susan Getzendanner, George C. Pratt, Charles B. Renfrew and Sandra Day O'Connor.

Impact

In 2008, Canadian exports to the United States and Mexico were at $381.3 billion, with imports at $245.1 billion.[59] According to a 2004 article by University of Toronto economist Daniel Trefler, NAFTA produced a significant net benefit to Canada in 2003, with long-term productivity increasing by up to 15 percent in industries that experienced the deepest tariff cuts.[60] While the contraction of low-productivity plants reduced employment (up to 12 percent of existing positions), these job losses lasted less than a decade; overall, unemployment in Canada has fallen since the passage of the act. Commenting on this trade-off, Trefler said that the critical question in trade policy is to understand "how freer trade can be implemented in an industrialized economy in a way that recognizes both the long-run gains and the short-term adjustment costs borne by workers and others".[61]

A study in 2007 found that NAFTA had "a substantial impact on international trade volumes, but a modest effect on prices and welfare".[62]

According to a 2012 study, with reduced NAFTA trade tariffs, trade with the United States and Mexico only increased by a modest 11% in Canada compared to an increase of 41% for the U.S. and 118% for Mexico.[63]:3 Moreover, the U.S. and Mexico benefited more from the tariff reductions component, with welfare increases of 0.08% and 1.31%, respectively, with Canada experiencing a decrease of 0.06%.[63]:4

Current issues

According to a 2017 report by the New York City based public policy think tank report, Council on Foreign Relations (CFR), bilateral trade in agricultural products tripled in size from 1994 to 2017 and is considered to be one of the largest economic effects of NAFTA on U.S.-Canada trade with Canada becoming the U.S. agricultural sectors' leading importer.[64] Canadian fears of losing manufacturing jobs to the United States did not materialize with manufacturing employment holding "steady". However, with Canada's labour productivity levels at 72% of U.S. levels, the hopes of closing the "productivity gap" between the two countries were also not realized.[64]

According to a 2018 Sierra Club report, Canada's commitments under NAFTA and the Paris agreement conflicted. The Paris commitments were voluntary, and NAFTA's were compulsory.[65]

According to a 2018 report by Gordon Laxter published by the Council of Canadians, NAFTA's Article 605, energy proportionality rule ensures that Americans had "virtually unlimited first access to most o

A study in 2007 found that NAFTA had "a substantial impact on international trade volumes, but a modest effect on prices and welfare".[62]

According to a 2012 study, with reduced NAFTA trade tariffs, trade with the United States and Mexico only increased by a modest 11% in Canada compared to an increase of 41% for the U.S. and 118% for Mexico.[63]:3 Moreover, the U.S. and Mexico benefited more from the tariff reductions component, with welfare increases of 0.08% and 1.31%, respectively, with Canada experiencing a decrease of 0.06%.[63]:4

According to a 2017 report by the New York City based public policy think tank report, Council on Foreign Relations (CFR), bilateral trade in agricultural products tripled in size from 1994 to 2017 and is considered to be one of the largest economic effects of NAFTA on U.S.-Canada trade with Canada becoming the U.S. agricultural sectors' leading importer.[64] Canadian fears of losing manufacturing jobs to the United States did not materialize with manufacturing employment holding "steady". However, with Canada's labour productivity levels at 72% of U.S. levels, the hopes of closing the "productivity gap" between the two countries were also not realized.[64]

According to a 2018 Sierra

According to a 2018 Sierra Club report, Canada's commitments under NAFTA and the Paris agreement conflicted. The Paris commitments were voluntary, and NAFTA's were compulsory.[65]

According to a 2018 report by Gordon Laxter published by the Council of Canadians, NAFTA's Article 605, energy proportionality rule ensures that Americans had "virtually unlimited first access to most of Canada's oil and natural gas" and Canada could not reduce oil, natural gas and electricity exports (74% its oil and 52% its natural gas) to the U.S., even if Canada was experiencing shortages. These provisions that seemed logical when NAFTA was signed in 1993 are no longer appropriate.[66]:4 The Council of Canadians promoted environmental protection and was against NAFTA's role in encouraging development of the tar sands and fracking.[66]

US President Donald Trump, angered by Canada's dairy tax of "almost 300%", threatened to leave Canada out of the NAFTA.[67] Since 1972, Canada has been operating on a "supply management" system, which the United States is attempting to pressure it out of, specifically focusing on the dairy industry. However, this has not yet taken place, as Quebec, which holds approximately half the country's dairy farms, still supports supply management.[67]

Maquiladoras (Mexican assembly plants that take in imported components and produce goods for export) became the landmark of trade in Mexico. They moved to Mexico from the United States[citation needed], hence the debate over the loss of American jobs. Income in the maquiladora sector had increased 15.5% since the implementation of NAFTA in 1994.[68] Other sectors also benefited from the free trade agreement, and the share of exports to the U.S. from non-border states increased in the last five years[when?] while the share of exports from border states decreased. This allowed for rapid growth in non-border metropolitan areas such as Toluca, León, and Puebla, which were all larger in population than Tijuana, Ciudad Juárez, and Reynosa.

The overall effect of the Mexico–U.S. agricultural agreement is disputed. Mexico did not invest in the infrastructure necessary for competition, such as efficient railroads and highways. Th

The overall effect of the Mexico–U.S. agricultural agreement is disputed. Mexico did not invest in the infrastructure necessary for competition, such as efficient railroads and highways. This resulted in more difficult living conditions for the country's poor. Mexico's agricultural exports increased 9.4 percent annually between 1994 and 2001, while imports increased by only 6.9 percent a year during the same period.[69]

One of the most affected agricultural sectors was the meat industry. Mexico went from a small player in the pre-1994 U.S. export market to the second largest importer of U.S. agricultural products in 2004, and NAFTA may have been a major catalyst for this change. Free trade removed the hurdles that impeded business between the two countries, so Mexico provided a growing market for meat for the U.S., and increased sales and profits for the U.S. meat industry. A coinciding noticeable increase in the Mexican per capita GDP greatly changed meat consumption patterns as per capita meat consumption grew.[70]

Production of corn in Mexico increased since NAFTA. However, internal demand for corn had increased beyond Mexico's supply to the point where imports became necessary, far beyond the quotas Mexico originally negotiated.[71] Zahniser & Coyle pointed out that corn prices in Mexico, adjusted for international prices, have drastically decreased, but through a program of subsidies expanded by former president Vicente Fox, production remained stable since 2000.[72] Reducing agricultural subsidies, especially corn subsidies, was suggested as a way to reduce harm to Mexican farmers.[73]

A 2001 Journal of Economic Perspectives review of the existing literature found that NAFTA was a net benefit to Mexico.[6] By the year 2003, 80% of the commerce in Mexico was executed only with the U.S. The commercial sales surplus, combined with the deficit with the rest of the world, created a dependency in Mexico's exports. These effects were evident in the 2001 recession, which resulted in either a low rate or a negative rate in Mexico's exports.[74]

A 2015 study found that Mexico's welfare increased by 1.31% as a result of the NAFTA tariff reductions and that Mexico's intra-bloc trade increased by 118%.[63] Inequality and poverty fell in the most globalization-affected regions of Mexico.[75] 2013 and 2015 studies showed that Mexican small farmers benefited more from NAFTA than large-scale farmers.[76][77]

NAFTA had also been credited with the rise of the Mexican middle class. A Tufts University study found that NAFTA lowered the average cost of basic necessities in Mexico by up to 50%.[78] This price reduction increased cash-on-hand for many Mexican families, allowing Mexico to graduate more engineers than Germany each year.[79]

Growth in new sales orders indicated an increase in demand for manufactured products, which resulted in expansion of production and a higher employment rate to satisfy the increment in the demand. The growth in the maquiladora industry and in the manufacturing industry was of 4.7% in August 2016.[80] Three quarters of the imports and exports are with the U.S.

Tufts University political scientist Daniel W. Drezner argued that NAFTA made it easier for Mexico to transform to a real democracy and become a country that views itself as North American. This has boosted cooperation between the United States and Mexico.[81]

Economists generally agreed that the United States economy benefited overall from NAFTA as it increased trade.[82][83] In a 2012 survey of the Initiative on Global Markets' Economic Experts Panel, 95% of the participants said that, on average, U.S. citizens benefited from NAFTA while none said that NAFTA hurt US citizens, on average.[5] A 2001 Journal of Economic Perspectives review found that NAFTA was a net benefit to the United States.[6] A 2015 study found that US welfare increased by 0.08% as a result of NAFTA tariff reductions, and that US intra-bloc trade increased by 41%.[63]

A 2014 study on the effects of NAFTA on US trade jobs and investment found

A 2014 study on the effects of NAFTA on US trade jobs and investment found that between 1993 and 2013, the US trade deficit with Mexico and Canada increased from $17.0 to $177.2 billion, displacing 851,700 US jobs.[84]

In 2015, the Congressional Research Service concluded that the "net overall effect of NAFTA on the US economy appears to have been relatively modest, primarily because trade with Canada and Mexico accounts for a small percentage of US GDP. However, there were worker and firm adjustment costs as the three countries adjusted to more open trade and investment among their economies." The report also estimated that NAFTA added $80 billion to the US economy since its implementation, equivalent to a 0.5% increase in US GDP.[85]

The US Chamber of Commerce credited NAFTA with increasing U.S. trade in goods and services with Canada and Mexico from $337 billion in 1993 to $1.2 trillion in 2011, while the AFL–CIO blamed the agreement for sending 700,000 American manufacturing jobs to Mexico over that time.[86]

University of California, San Diego economics professor Gordon Hanson said that NAFTA helped the US compete against China and therefore saved US jobs.[87][88] While some jobs were lost to Mexico as a result of NAFTA, considerably more would have been lost to China if not for NAFTA.[87][88]

The US had a trade surplus with NAFTA countries of $28.3 billion for services in 2009 and a trade deficit of $94.6 billion (36.4% annual increase) for goods in 2010. This trade deficit accounted for 26.8% of all US goods trade deficit.[89] A 2018 study of global trade published by the Center for International Relations identified irregularities in the patterns of trade of NAFTA ecosystem using network theory analytical techniques. The study showed that the US trade balance was influenced by tax avoidance opportunities provided in Ireland.[90]

A study published in the August 2008 issue of the American Journal of Agricultural Economics, found NAFTA increased US agricultural exports to Mexico and Canada, even though most of the increase occurred a decade after its ratification. The study focused on the effects that gradual "phase-in" periods in regional trade agreements, including NAFTA, have on trade flows. Most of the increases in members' agricultural trade, which was only recently brought under the purview of the World Trade Organization, was due to very high trade barriers before NAFTA or other regional trade agreements.[91]

The U.S. foreign direct investment (FDI) in NAFTA countries (stock) was $327.5 billion in 2009 (latest data available)[when?], up 8.8% from 2008.[89] The US direct investment in NAFTA countries was in non-bank holding companies and the manufacturing, finance/insurance, and mining sectors.[89] The foreign direct investment of Canada and Mexico in the United States (stock) was $237.2 billion in 2009 (the latest data available), up 16.5% from 2008.[89][92]

Economy and jobs<

In their May 24, 2017 report, the Congressional Research Service (CRS) wrote that the economic impacts of NAFTA on the U.S. economy were modest. In a 2015 report, the Congressional Research Service summarized multiple studies as follows: "In reality, NAFTA did not cause the huge job losses feared by the critics or the large economic gains predicted by supporters. The net overall effect of NAFTA on the U.S. economy appears to have been relatively modest, primarily because trade with Canada and Mexico accounts for a small percentage of U.S. GDP. However, there were worker and firm adjustment costs as the three countries adjusted to more open trade and investment among their economies."[93]:2

Many American small businesses depended on exporting their products to Canada or Mexico under NAFTA. According to the U.S. Trade Representative, this trade supported over 140,000 small- and medi

Many American small businesses depended on exporting their products to Canada or Mexico under NAFTA. According to the U.S. Trade Representative, this trade supported over 140,000 small- and medium-sized businesses in the US.[94]

According to University of California, Berkeley professor of economics Brad DeLong, NAFTA had an insignificant impact on US manufacturing.[95] The adverse impact on manufacturing was exaggerated in US political discourse according to DeLong[95] and Harvard economist Dani Rodrik.[96]

According to a 2013 article by Jeff Faux published by the Economic Policy Institute, California, Texas, Michigan and other states with high concentrations of manufacturing jobs were most affected by job loss due to NAFTA.[97] According to a 2011 article by EPI economist Robert Scott, about 682,900 U.S. jobs were "lost or displaced" as a result of the trade agreement.[98] More recent studies agreed with reports by the Congressional Research Service that NAFTA only had a modest impact on manufacturing employment and automation explained 87% of the losses in manufacturing jobs.[99]

According to a study in the Journal of International Economics, NAFTA reduced pollution emitted by the US manufacturing sector: "On average, nearly two-thirds of the reductions in coarse particulate matter (PM10) and sulfur dioxide (SO2) emissions from the U.S. manufacturing sector between 1994 and 1998 can be attributed to trade liberalization following NAFTA."[100]

According to the Sierra Club, NAFTA contributed to large-scale, export-oriented farming, which led to the increased use of fossil fue

According to the Sierra Club, NAFTA contributed to large-scale, export-oriented farming, which led to the increased use of fossil fuels, pesticides and GMO.[101] NAFTA also contributed to environmentally destructive mining practices in Mexico.[101] It prevented Canada from effectively regulating its tar sands industry, and created new legal avenues for transnational corporations to fight environmental legislation.[101] In some cases, environmental policy was neglected in the wake of trade liberalization; in other cases, NAFTA's measures for investment protection, such as Chapter 11, and measures against non-tariff trade barriers threatened to discourage more vigorous environmental policy.[102] The most serious overall increases in pollution due to NAFTA were found in the base metals sector, the Mexican petroleum sector, and the transportation equipment sector in the United States and Mexico, but not in Canada.[103]

According to the Department of Homeland Security Yearbook of Immigration Statistics, during fiscal year 2006 (October 2005—September 2006), 73,880 foreign professionals (64,633 Canadians and 9,247 Mexicans) were admitted into the United States for temporary employment under NAFTA (i.e., in the TN status). Additionally, 17,321 of their family members (13,136 Canadians, 2,904 Mexicans, as well as a number of third-country nationals married to Canadians and Mexicans) entered the U.S. in the treaty national's dependent (TD) status.[104] Because DHS counts the number of the new I-94 arrival records filled at the border, and the TN-1 admission is valid for three years, the number of non-immigrants in TN status present in the U.S. at the end of the fiscal year is approximately equal to the number of admissions during the year. (A discrepancy may be caused by some TN entrants leaving the country or changing status before their three-year admission period has expired, while other immigrants admitted earlier may change their status to TN or TD, or extend TN status granted earlier).

According to the International Organization for Migration, deaths of migrants have been on the rise worldwide with 5,604 deaths in 2016.[105] An increased number of undocumented farmworkers in California may be due to the initial passing of NAFTA.[106]

Canadian authorities estimated that on December 1, 2006, 24,830 U.S. citizens and 15,219 Mexican citizens were in Canada as "foreign workers". These numbers include both entrants under NAFTA and those who entered under other provisions of Canadian immigration law.[107] New entries of foreign workers in 2006 totalled 16,841 U.S. citizens and 13,933 Mexicans.[108]

In the second 1992 presidential debate, Ross Perot argued: