NAFTA is ... North American Free Trade Area. NAFTA: goals and objectives

NAFTA is the North American Free Trade Area, which is an agreement between countries such as America, Canada and Mexico. On the territory of these states, a single market zone was formed. The agreement between the states was signed by its heads in 1994. In accordance with the terms of the contract, the countries that are members of the association assumed obligations in the next decade to completely eliminate both customs and passport barriers. Also, agreements were reached to establish rules for the formation of fair competition and create the necessary conditions for the free movement of services with capital.

Legal Aspects

From a legal point of view NAFTA is a modernized US-Canada free trade agreement, which was signed in 1988. If we consider the agreement between countries as a political phenomenon, it acts in the format of America's reaction to the European integration procedure, including in education, which took place in 1992.

NAFTA supports the orientation towards the model of the European Union in the aspect of economic integration. The difference is that there is no desire to form political supranational bodies. This is due to the developed differentiation of countries: America and Canada are highly developed regions, and Mexico is an actively developing region. NAFTA is significantly different from the EU in terms of the number of countries, but it far exceeds it not only in terms of GDP, but also in terms of population. It can be concluded that it is NAFTA - the world's largest economic association.

What perspectives did the cooperation open?

The NAFTA member countries, through cooperation, intensified trade and economic relations, not only did new ways of development open up, but a number of restrictions. America partially transferred to Mexico industrial production, began to import a wide range of goods from this state at lower prices compared to imports of similar goods from America.

At the same time, the activity on the US labor market increased with the flow of capacity to the territory of Mexico. The problem of deflation has become more active. For Mexico, the doors opened to the markets of the US and other developed countries, the volume of foreign investment has increased, including the volume of lending to the state's economy.

As for the economic dividends, they were one-sided for the developing country. Enrichment was felt only by the elite. Harmoniously all in the structure of the association was Canada. She managed to avoid large-scale de-industrialization with an increase in industrial exports. Canada's main role was to act as an intermediary in relations between America and the states of Latin America.

What is included in the concept of NAFTA?

The exclusive economic zone is essentially a set of agreements that extends not only to the sphere of services and investment, but also covers the unification of economically developed countries. The provisions of arrangements for business in North America include:

• Access to investment markets.
• Guarantees.
• Services and intellectual property rights.
• State procurements.
• Compliance with standards.
• Entrance for businessmen.
• Conflict resolution.

Obligations of participating countries

The exclusive economic zone imposed certain restrictions on the member countries. So, America, Canada and Mexico are obliged to maintain their national customs tariffs in the aspect of trade with third countries.

Free circulation of goods after the transitional period of 10 years (sometimes 15 years) in the zone of economic association was approved. The rule applies to goods that are identified as issued in the US, Mexico and Canada. The agreement provides for improving the terms of trade in services, setting up a mechanism for mutual investment.

The agreement has reservations about the temporary restoration of protection for certain industries that suffered losses as a result of imports of certain categories of goods. The NAFTA countries, listed above, must follow separate exceptions to the general regime of free economic relations.

Exceptions to the rules

Against the backdrop of the creation of a free trade zone, there are moments that do not correspond to the standard of accommodation. Thus, within the framework of NAFTA (North American Free Trade Area) the following standards continue to operate:

• Mexico reserved the right to impose restrictions on foreign activities in the oil segment.
• Canada has the right to restrict access to certain segments of information that are of some cultural importance. This broadcasting and the release of films, the publication of books and the production of records.
• The US retained the right to support the optimal level of domestic prices, the right to save procurement systems in the agricultural segment.

Specificity of elimination of duties

All products within the framework of cooperation are divided into three categories. This is an industrial group (with the exception of textile products), an agricultural group and a textile group with clothes inclusive. For each product category, there is a customized schedule for reducing duties. It is worth mentioning about the complete removal of duties on different groups of products. In the long term, NAFTA's association aims to be much more significant. It is planned to completely cancel most of the duties within 5-15 years.

Investment activity within the association and other

Within the framework of the NAFTA association, the countries of which are listed above, there are 5 dominant principles for the protection of foreign investors and their capital. It:

• Absence of any discrimination in the investor sector.
• Complete liquidation of the requirements for both investors and their deposits.
• Free movement of any cash flows that are directly related to investing.
• Expropriation (admittedly, within the framework of international law).
• An open right to apply to the bodies of judicial power of international rank in the presence of violations of the provisions of the current agreement.

The agreement provides for legal liability for violation of property rights for patents, trademarks and intellectual property. There is legislation that allows you to determine the area of production. So, the product is assigned to the state in whose territory it was subjected to the largest processing (calculated as a percentage).

Goals of association

NAFTA is a large-scale regional free trade area with a population of 406 million people and a combined GDP of $ 10.3 trillion. The formation of a tandem is due to a number of parameters and a list of goals that were planned to be achieved. The prerequisites for creating an association include the following:

• The composition of NAFTA is determined by the geographical proximity of the participating States. Moreover, the economies of the states seem to be mutually complementary. The same factor determined the structure of NAFTA. The headquarters of the coalition is not alone. There are three of them: in Ottawa, in Washington and in Mexico.
• Between the states there were always close economic relations and trade relations, there was an expansion of production co-operatives.
• On the territory of Canada and Mexico, the number of American enterprises has been systematically increasing. In Canada, Canadian multinationals flourish.
• The active strengthening of the positions not only of the EU, but also of Japan.

It is quite clear why the NAFTA was formed for what reasons. The participating countries, signing the treaty, in addition to the effectiveness of the partnership pursued a number of goals. This is the activation of trade by eliminating any restrictions, creating a healthy competitive environment, attracting investment, ensuring a high level of protection of intellectual property. The union does not cease to develop even today, constantly expanding its sphere of influence.