How and why the free trade zone was created in America

The United States of America has always positioned itself as the largest country, not only economically, but also in other sectors and areas of life. Moreover, during the late 80s of the last century, the disintegration of the Soviet Union began, which greatly strengthened the position of the states. But in the field of this problem, new players emerged - unifying Europe and Asia, which provoked the need to form a certain economic bloc in North America to further protect their own interests in the world arena. The optimal solution in this situation was the formation of such an economic union as the North American free trade zone, which included directly the United States, as well as Mexico and Canada. But this free trade zone was considered by its participants with different goals of entry.

Objectives of education

Naturally, the main goal of the organization was to remove all possible trade barriers in the field of trade between partner countries. It is worth noting that after the entry into force of the agreement from January 1, 1994, almost 50% of all previously existing barriers were automatically lifted. At the same time, the rest of the trade restrictions were lifted gradually, practically for the next 14 years. In addition to everything, albeit not the main one, but the task facing the organization was to oppose the former socialist camp, where, among other things, the CIS free trade zone was formed.

In the above text, the concept of an organization should not be associated with a kind of interstate formation with a certain legislative framework and certain regulatory bodies. The free trade zone in America did not initially intend to create a structure similar to the European Union (a free trade area of the CIS can serve as an example), remaining all the time exclusively as an intergovernmental economic agreement, nothing more.

Benefits and disadvantages for participating countries

Given the fact that the North American Free Trade Area did not provide for any barriers to trade, the Americans had the opportunity to buy goods from neighboring countries, often cheaper than those produced domestically. It would seem that the free trade zone infringes upon the interests of local producers, but this in practice turned out to be far from the case, as US companies gained huge potential of access to neighboring markets, which significantly increased turnover, for example, with Mexico in just four first years of existence in more than 2 Times. The reverse side of the coin is two facts. The first is the leakage of production, and accordingly, of capital to Mexico, because there are initially lower environmental standards and, naturally, cheaper labor. And the second - the influx of emigrants from the same Mexico with their culture and traditions, often in violation of the American Protestant.

As for the Mexicans, the free trade area provided them with an excellent opportunity to enter the markets of the rest of the world, based on the credibility and potential of the United States. Again, thanks to these weighty arguments, the influx of foreign investments into the country sharply increased, which became a significant impetus in the development of the economy and allowed to abandon the implemented program of import substitution in those years.

Speaking of Canada, it should be noted that it potentially has economic opportunities between the US and Mexico. Thus, during the entire period of the agreement's existence the Canadians tried to consolidate with Mexico in defending their interests against the States, which sometimes tried to make certain decisions based on their potential, but contrary to the opinion of the other participating countries.