North American Free Trade Area (naphtha). Main characteristics of naphtha

Due to the integration processes in Europe and Asia that took place in the 1980s, the issue of creating NAFTA became more acute, as it became clear that the answer to the unification of Europe should be the unification of America, and, as part of it, North America. From the very beginning, however, Mexico, Canada, and the United States viewed the significance and potential of NAFTA from different perspectives.

The agreement establishing the North American Free Trade Association (NAFTA) entered into force on January 1, 1994, preserving and confirming the US-Canada Free Trade Agreement (CUSFTA) of 1988. The main goal of NAFTA was to remove barriers to trade in goods between participating countries. Half of the barrier restrictions were removed immediately, the rest were removed gradually over 14 years. Such an agreement became an expanded version of the 1989 trade agreement between Canada and the United States.

Unlike the European Union, NAFTA did not aim to create interstate administrative bodies, nor did it set out to create laws that would govern such a system. NAFTA is only an international trade agreement under international law.

The goals of NAFTA include:

removing barriers and stimulating the movement of goods and services between the countries-participants of the agreement;

creation and maintenance of conditions for fair competition in the free trade zone;

attraction of investments to the countries-members of the agreement;

ensuring proper and effective protection and protection of intellectual property rights in the Zone;

creation of effective mechanisms for the implementation and use of the Agreement, joint dispute resolution and management;

establishing a basis for future trilateral, regional and international cooperation in order to expand and improve the Agreement.

The economic impact of NAFTA on the United States. The United States has benefited greatly from this agreement:

in the vast majority of industries, barriers against foreign manufacturers from NAFTA partner countries were gradually reduced to a minimum, which made it possible to purchase many goods from them cheaper than in the United States itself;

American companies opened up much wider opportunities for access to the markets of neighboring countries, which expanded the sales market.

The participation of the United States in the regional integration process has become a powerful factor in the long-term positive impact on domestic economic development.

In 1993–1997 alone, the total trade turnover with Mexico almost doubled (from $80.5 billion to $197 billion), and with Canada almost doubled (from $197 billion to $364 billion). Both countries account for a third of US foreign trade. In the early 2000s, the average annual growth in trade with Mexico was more than 20%, with Canada - 10%. Duty-free status has already extended to two-thirds of all US exports in the region, and these opportunities continue to expand. The US needs such regional economic integration to increase its competitiveness with respect to its main economic rivals - the EU and Japan.

At the same time, various environmental and labor groups in the US, as well as many members of the US Congress, fear the relocation of US business activity to Mexico, with its low labor and environmental standards. In addition, Americans are afraid of the increasing flow of immigrants from Mexico since the 1990s, which in the 2000s already reached 300 thousand people a year. This "Hispanicization" of the United States seems to many Americans a threat to their civilization based on the values of the Protestant European culture.

Mexico's role in NAFTA. For Mexico, membership in NAFTA means guaranteed access to the US market, absorbing approx. 80% of all Mexican exports, increased foreign investment. The desire for economic integration with the United States was the impetus for the neoliberal reforms undertaken by the Mexican government back in the early 1980s, abandoning the import-substituting development strategy.

Through regional association with the United States, Mexico began to gradually integrate into the global economy. Of particular importance to her was also a positive solution to the issue of external debt after significant financial losses incurred in the 1980s: the Mexican government obtained large loans from the United States to implement free trade agreements. Many foreign companies began to transfer their activities to the territory of Mexico in order to penetrate the American and Canadian markets. Foreign direct investment in Mexico doubled between 1993 and 1999 alone.

Participation in NAFTA turned Mexico into a program of trade liberalization and economic restructuring, which in the future makes it difficult to move away from it, and the return to economic independence - almost impossible.

Canada's role in NAFTA. Canada is an objectively stronger NAFTA member than Mexico, but weaker than the US. Therefore, Canada is inclined to block with Mexico in defending its interests, in order to put pressure on Washington. In the early 1990s, Canada relied on the support of Mexico to counter the protectionist actions of the United States. In turn, Mexico received in 1995 the support of Canada when applying to the IMF and IBRD, when it became necessary to urgently intervene to save the Mexican peso.

Canada is actively in favor of expanding the free trade zone, considering Chile, as well as Colombia and Argentina, to be the top candidates for joining the bloc. Demonstrating their independence and determination, the Canadians declared that they would not wait for the Americans, and in 1996 they entered into a bilateral free trade agreement with Chile on the model of NAFTA, as well as two additional ones - on the regulation of labor relations and on environmental protection - on the model of the corresponding tripartite agreements. 1993 between Canada, USA and Mexico. Canada has concluded various bilateral agreements with many Latin American countries on certain issues of economic cooperation, and is persistently promoting the idea of integrating NAFTA with MERCOSUR. Canada has been actively involved in the implementation of the FTAA plan. In 1998, she began to chair the negotiations for this agreement, which was declared a priority of Canadian policy in the region.

Thus, within just one decade, Canada has turned from a rather passive observer into a full-fledged and active participant in the multilateral processes and activities of the countries of the region. At the same time, Canadians act in their traditional role as an intermediary between countries with different levels of economic development and different ideological orientations.

In 2000, exports to the United States accounted for approximately 33% of Canada's total GDP, compared with 15% in 1989. The link to the American market became especially strong in Canada's two largest provinces in terms of population and economic potential - Ontario (the share of exports to the United States is 40% gross product) and in Quebec (24%).

NAFTA is the North American Free Trade Area, which is an agreement between countries such as America, Canada, and Mexico. A single market zone was formed on the territory of these states. The agreement between the states was signed by its heads in 1994. In accordance with the terms of the agreement, the countries that are part of the association committed themselves to completely eliminate both customs and passport barriers in the next decade. Agreements were also reached to establish rules for the formation of fair competition and the creation of the necessary conditions for the free movement of services with capital.

Legal aspects

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

NAFTA supports the orientation to the model in the aspect The difference lies in the absence of a desire to form political supranational bodies. This is due to the developed differentiation of countries: America and Canada are highly developed regions, while Mexico is an actively developing area. NAFTA differs significantly from the EU in terms of the number of countries, but significantly exceeds it not only in terms of GDP, but also in terms of population. It can be concluded that NAFTA is the world's largest economic association.

What are the prospects for cooperation?

Thanks to cooperation, NAFTA member countries have intensified trade and economic relations, while not only new development paths have opened up, but a number of restrictions have appeared. America partially transferred industrial production to the territory of Mexico, began to import a wide range of goods from this state at lower prices in comparison with the import of similar goods from America.

In parallel, activity in the US labor market increased as capacities flowed to Mexico. The problem of deflation has intensified. For Mexico, the doors to the markets of the United States and other developed countries have opened, the volume of foreign investment has increased, including the volume of lending to the state's economy.

As for economic dividends, they were one-sided for a developing country. Enrichment was felt only by the elite. Canada most harmoniously fit into the structure of the association. She managed to avoid large-scale deindustrialization while increasing industrial exports. Canada's main role was to act as an intermediary 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 service sector and investment, but also covers the association. The provisions of the agreements regarding business activities in North America include:

Access to investment markets.
Guarantees.
Services and intellectual property rights.
State procurements.
Measures to comply with standards.
Entry for businessmen.
Resolution of conflict situations.

Obligations of participating countries

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

Approved free circulation of goods after a transitional period of 10 years (sometimes 15 years) in the area of economic association. The rule applies to products that are identified as being manufactured in the US, Mexico, and Canada. The agreement provides for the improvement of the terms of trade in services, the adjustment of a mechanism for mutual investment.

The agreement contains reservations regarding the temporary restoration of protection for some who have suffered losses as a result of the import of certain categories of goods. The NAFTA countries listed above are subject to separate exemptions from the general free trade regime.

Exceptions to the rules

Against the background of the creation of the zone, there are moments that do not meet the standard of the agreement. So, within the framework of the NAFTA association (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 have some cultural significance. These are radio broadcasting and the release of films, the publication of books and the production of records.
The United States retained the right to support the optimal level of domestic prices, the right to save procurement systems in the agricultural segment.

The specifics of the liquidation of duties

All products within the framework of cooperation are divided into three categories. This is an industrial group (excluding textile products), an agricultural group and a textile group with clothing inclusive. Each category of goods has its own individual duty reduction schedule. It is worth mentioning the complete removal of duties on various groups of products. In the future, the unification of NAFTA sets much more significant goals. Within 5-15 years, it is planned to completely abolish most of the duties.

Investment activities within the framework of the association, etc.

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. This:

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

Association goals

NAFTA is a massive regional free trade area with a population of around 406 million 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:

It is quite clear why NAFTA was formed. By signing the agreement, the participating countries, in addition to the effectiveness of the partnership, also pursued a number of goals. This is the activation of trade by eliminating any restrictions, creating a healthy competitive environment, attracting investment, and ensuring a high level of protection of intellectual property. The association does not stop developing even today, constantly expanding its spheres of influence.

The most developed integration grouping on the American continent is the North American Free Trade Area (“North American Free Trade Area” - NAFTA), formed in January 1994 by the USA, Canada and Mexico. NAFTA is currently the world's largest regional free trade area, with a population of 406 million and a combined gross domestic product of $10.3 trillion. The North American Free Trade Agreement contains a set of agreements that extend beyond trade to services and investment, and for the first time brings together industrialized nations and a developing country.

The creation of a free trade zone in the North American region was due to a number of factors: firstly, the geographical proximity of the participating countries and elements of complementarity of the structures of national economies; secondly, close trade ties between them and expanding industrial cooperation; thirdly, the growing network of controlled enterprises of American TNCs in Canada and Mexico and Canadian TNCs in the USA and, finally, the strengthening of the positions of the EU, Japan and the newly industrialized countries in the world market.

The scale of the economic relationship between the United States, Canada and Mexico based on mutual trade and the movement of capital can be judged from the following data. About 75-80% of Canadian exports (20% of Canada's GDP) are sold in the USA. The US share in foreign direct investment in Canada is over 75% and Canada in the US is 9%. About 70% of Mexican exports go to the USA, and 65% of Mexican imports come from there. The share of the United States in the total inflow of foreign direct investment in Mexico exceeds 60%. The US GDP is 14.5 times that of Canada and 19 times that of Mexico.

Indicators of socio-economic development of countries - members of NAFTA in 1999

indicator
Population (million people)
Territory (thousand sq. km)
GDP (billion dollars)
GDP per capita (billion dollars)
Gold and foreign exchange reserves (billion dollars)
(billion dollars)
Import (billion dollars)
Balance (billion dollars)
Share in world exports (%)
Export of services (billion dollars)
Import of services (billion dollars)
Share in world exports of services (%)
Export quota (%)
Investment climate (share of foreign capital in total direct investment, %)

The NAFTA agreement can be considered a fundamentally new stage in the process of liberalization of trade in goods and services, as well as investment between the United States, Canada and Mexico. In contrast to Western Europe, in North America, the impulses to create an economic complex came “from the bottom up” - from the desire for cooperation between American and Canadian companies.

During the XX century. the borders between the US and Canada were gradually blurred through the relatively free movement of goods, capital, and labor. A qualitative change in economic relations between the US and Canada occurred in 1988, when the US-Canadian free trade agreement was concluded at the interstate level. It provided for the mutual obligations of the two countries to eliminate restrictions on trade in goods and services (in transport, telecommunications, computer, financial systems, tourism), to abolish restrictions on foreign property in the credit and financial system of Canada and Canadian banks in the United States, and a number of other provisions. .

At the same time, in the 1980s and early 1990s, the economies of the United States and Mexico were interpenetrating. In 1992, Mexico joins the US-Canadian Free Trade Agreement. The integration processes in NAFTA, as conceived by its organizers, will proceed according to the type of integration in the EU: the creation of a common market for goods, capital, labor, technologies of the USA, Canada, Mexico, organisms of the three countries.

In terms of population, gross domestic product and a number of basic economic indicators, the North American integration group is comparable to the European Union. NAFTA has strong (especially thanks to the US) economic potential, for example, the annual production of goods and services by the US, Canada and Mexico is equal to 5 trillion dollars, and their share in world trade is almost 20%.

The structure of the North American integration complex has its own characteristics compared to the European model of integration.

The main difference is the asymmetric economic dependence of the USA, Canada and Mexico. The interaction between the economic structures of Mexico and Canada is far inferior in depth and scope to Canadian-American and Mexican-American integration. Canada and Mexico are more likely to be competitors in the American market for goods and labor, rivals in attracting capital and technology from American corporations, than partners in the integration process.

Another feature of the North American economic grouping is that its members are in different starting conditions. If Canada over the past decade has managed to approach the United States in terms of the main economic macro indicators (GDP per capita, labor productivity), then Mexico, which for many years has been in the position of an economically backward state with a large external debt, is still noticeably behind these countries in terms of basic basic indicators.

The creation in 1994 of NAFTA reflects a new approach in the theory and practice of integration. For the first time, a "third world" state voluntarily united with two highly developed countries. The difference in GDP per capita between Mexico and the United States reaches 6.6 times, and with Canada - 4.1 times. Such a significant gap in the levels of economic development of the member countries makes it difficult to create a single economic complex.

The NAFTA Agreement contains the following provisions dealing with various aspects of business activity within North America: market access; investments; guarantees; services, intellectual property rights; state procurements; measures related to compliance with standards; temporary entry for businessmen; dispute resolution.

The key points of the NAFTA agreement, which regulates in detail many aspects of economic relations between neighboring countries, are:

Elimination of all customs duties on goods traded between the United States, Canada and Mexico by 2010;

Gradual elimination of a significant number of non-tariff barriers to trade in goods and services;

Relaxation of the regime for North American investment in Mexico;

Liberalization of the activities of American and Canadian banks in the Mexican financial market;

Protecting the North American market from the expansion of Asian and European companies trying to avoid US duties by re-exporting their goods to the US through Mexico;

Creation of the US-Canadian Arbitration Commission.

Thus, the agreement on the creation of NAFTA assumes that the participating countries will retain national customs tariffs in trade with third countries, and in mutual trade, a transitional period of 10 years (in some cases - 15 years) in this economic zone will be free circulation of goods. It applies to products that qualify as manufactured in the US, Canada, and Mexico. The implementation of the agreement will lead to the elimination of all tariff and non-tariff barriers to trade. In addition, it provides for the improvement of trade in services, the establishment of fair rules for mutual investment and public procurement, strengthening the protection of intellectual property rights, and the creation of a dispute resolution mechanism.

By removing tariffs and other protectionist barriers, NAFTA imposes restrictive rules on trade in a number of goods and investments in certain sectors of the economy, especially "sensitive" to foreign competition (this applies to agriculture, energy, automotive products, textiles). In addition, the agreement contains clauses that allow temporary protection to be restored to industries that have been harmed by imports of related products.

At the same time, NAFTA contains some exceptions to the free economic relations regime. Thus, the right of Mexico to ban foreign activity in the oil sector, the right of Canada to protect certain sectors of information that are culturally important (radio broadcasting, the release of films, records, books), the right of the United States to maintain domestic prices and preserve the system of purchasing agricultural goods are preserved.

In the agreement, all goods are divided into three large groups - industrial (without textile goods), agricultural and textile products, including clothing. Schedules for the reduction of duties have been developed for each group, and for a number of industrial goods the removal of duties has been envisaged and carried out immediately. Duties on other goods are scheduled to be abolished within 5, 10 and 15 years. The difference in schedules for reducing duties on industrial goods (with a time interval of five years) is due to the “sensitivity” of the respective industries to imports of competing products.

Differentiated conditions for trade liberalization are also provided for individual countries participating in the agreement. For example, Mexican tariffs on imports of American manufactured goods will be eliminated within 10 years. At the same time, approximately half of Mexican duties are eliminated when the agreement enters into force; in the future (within five years), up to 70% of all goods from the United States will be imported into Mexico duty-free. From the US side, Mexico gets easier access to a large part of the North American market; the removal of duties within five years extends to almost 90% of industrial products. At the same time, tariffs on a small number of products "sensitive" to US industry will not be eliminated until almost the end of the 15-year period.

Tariffs on trade between Mexico and Canada are also being phased out over a period of ten years.

In mutual trade between the United States and Canada, there is an agreement not to change the tariff reduction schedules previously developed under a bilateral agreement between them in 1989.

The gradual reduction of customs tariffs under NAFTA is based on the base rates in force on July 1, 1991. With regard to the rules of origin of goods, NAFTA establishes the following requirements: the goods must be completely produced in the North American free trade area or substantially transformed into a new product and, accordingly, fall under a different tariff line of the Harmonized System. For some goods (cars, chemical products, shoes), in addition, it is required that at least 50-60% of the components be produced in the countries participating in the agreement.

In addition, NAFTA removes other barriers to trade, such as import licensing requirements and customs clearance fees.

NAFTA effectively establishes a national regime in trade, and it extends not only to goods, but also to services, including the right to invest in services and sell services across borders. For example, in the financial services industry, NAFTA enables US banks and securities firms to establish fully functional representative offices in Mexico for the first time in half a century.

The NAFTA agreement establishes 5 basic principles for the protection of foreign investors and their investments in the free trade zone: non-discriminatory regime; removal of special requirements for investments or investors (these requirements usually relate to activities carried out by order of the state or approved by it, as a condition for the establishment or operation of foreign enterprises in a particular country); free movement of financial resources related to investments; expropriation only in accordance with international law; the right to apply to an international court in case of violation of the Agreement.

Finally, NAFTA establishes the world's highest standards for the protection of intellectual property rights, including copyrights, patents and trademarks.

Paying tribute to the importance of NAFTA for the development of regional cooperation, American experts note that the agreement brings relatively modest results to the economies of the United States and Canada, since there were relatively few restrictions on trade and cross-border investment between both countries before the agreement.

However, it will bring benefits to the Mexican economy. One of the main goals of the agreement, from the standpoint of US interests, is to ensure the further implementation of economic reforms in this country. These reforms are expected to create a more predictable, stable business climate for US and Canadian exporters and investors. Mexico hopes that with the creation of a favorable trade and investment climate, capital inflows and employment can be expected. In addition, Mexico is interested in weakening US protectionism and expanding exports to the US and Canada, as well as gaining access to new technologies and natural resources.

In Canada, NAFTA could create opportunities for further export expansion, first by safeguarding and strengthening the gains already made in the trade liberalization agreement previously negotiated with the US, second by improving market access to Mexico, and third by making Canada more attractive to investors , primarily American.

In general, the implementation of NAFTA, according to experts, will lead to an increase in the growth rate of the United States and Canada by a maximum of 0.5 percentage points, subject to the simultaneous implementation of all its provisions. Such a modest effect is explained, on the one hand, by the relatively low barriers to trade and active investment activity between the United States and Canada even before the conclusion of the agreement, which favored the mutual movement of goods and services, and on the other hand, by the relatively small size of the Mexican economy compared to the American and Canadian . For Mexico, the benefit, according to the most optimistic forecast, is estimated at 11% of GDP growth.

Thus, the integration processes in NAFTA in comparison with the EU are distinguished by the dominant position of the United States in the North American economic region, the weak interdependence of the economies of Canada and Mexico, and the asymmetry of economic interaction between the United States, Canada and Mexico associated with these processes.

(The review was prepared on the basis of a study carried out by VNIKI commissioned by the Ministry of Economic Development of the Russian Federation)

The NAFTA Agreement is NAFTA, the North American Free Trade Agreement. This is the name of the integration economic association, whose members are Canada, the United States and Mexico. By its nature, this bloc is most similar to the European Union. The NAFTA zone is the most important part of the modern world economy. Without it, the modern North American economy would not exist.

Prerequisites for the emergence

The advent of NAFTA was preceded by several important events. The first of these can be called the Abbott Plan. It appeared in 1947 and was intended to stimulate US investment in the Canadian economy. 12 years later, neighboring countries entered into a new agreement regarding joint military production. Thanks to him, Canada adopted American standards in this area of the economy.

Then, in 1965, another treaty was adopted to liberalize trade in the automotive industry. So time after time, new agreements were concluded between countries in all new sectors of the economy. Gradually, Mexico was included in this process. In the 1980s integration touched energy for the first time. US Presidents Ronald Reagan and George W. Bush actively contributed to the implementation of this agenda. NAFTA is the fruit of their efforts.

Emergence of a free trade zone

In 1988, CUSFTA, the Canada-US Free Trade Agreement, was adopted. According to the agreement, the countries were going to create a single integrated space within ten years. NAFTA is a direct development of CUSFTA ideas. This union was formed in parallel with similar unions in Europe. Thus, it was not an accidental political move by the three countries, but part of an overall universal process.

The key date for the emergence of NAFTA was October 7, 1992. On that day, the presidents of Mexico and the United States, as well as the Prime Minister of Canada, signed the corresponding agreement. As agreed by the parties, the NAFTA free trade zone appeared in January 1994.

Consequences

What exactly did the emergence of NAFTA lead to? The establishment of the union made it possible to remove barriers to trade and more effectively promote the free exchange of services and goods between the three countries. Fair competition conditions have been established within the North American zone. Investment opportunities have also expanded.

The North American Free Trade Area NAFTA promoted the protection of intellectual property rights. Foreign economic relations of the USA, Canada and Mexico have undergone liberalization. In a few years, almost all investment and trade obstacles that hindered the development of economic ties between neighbors were eliminated.

Immediately after the advent of NAFTA, North American states lowered tariffs on trade in food and manufactured goods. Then a course was taken for a complete rejection of customs payments. In 1998, they disappeared from Canadian-American trade, and in 2003 from Mexico trade as well.

Failed expansion

Already in 1994, the first projects to expand the union arose. Many economists and politicians believed that NAFTA was an organization that was on its way to Chile. Official negotiations on the entry of the South American country into the free trade zone began in the summer of 1995. This idea immediately gained both opponents and supporters.

The Latin American state itself has repeatedly demonstrated a serious desire to join NAFTA. So, in Chile, tariffs were significantly reduced. The fall stopped at around 15%. In 1997, Santiago and Ottawa completed negotiations, which resulted in the signing of an agreement on cooperation in the field of environment and labor protection. It was believed that such a move would be the prologue to Chile's accession to NAFTA. However, this did not happen. The organization has remained exclusively North American.

Changes in the American economy

As a result of the advent of NAFTA, the United States has received significant benefits. In many industries, a situation has developed when it has become even more profitable for the States to purchase goods abroad than in the country itself. The statistics are also indicative. For example, in the Canadian province of Ontario, the share of exports to a neighboring country amounted to 40% of its own gross domestic product, and in Quebec - 24%.

The North American Free Trade Area NAFTA has expanded the market for US companies. The supply of semi-finished products and materials from Mexico and Canada to the United States has become much more sustainable. American corporations have reduced the cost of their own production, as they were able to use cheap and affordable labor.

In general, the United States has noticeably strengthened its competitive positions, and its domestic economic development has been under a long-term positive impact. In 1993-1997 trade with Mexico increased 2.5 times, and with Canada - 2 times. Today, about a third of US foreign trade is with these two countries. Duty-free status has already been extended to 2/3 of all US exports in this region. Thanks to the transformations of the 1990s, the NAFTA countries have significantly increased their competitiveness in relation to Japan and the European Union.

NAFTA and Mexico

What has the North American Free Trade Agreement (NAFTA) done for Mexico? The 1992 treaty contributed to its integration into the global economy. The issue of external debt was also resolved, due to which the country suffered serious financial losses in the 1980s. The free trade agreement required significant funds. The Mexican government was able to obtain large loans from the United States for their implementation. The country's market has become a launching pad for many foreign investors who wanted to get to the States or Canada in the future. The influx of foreign capital into Mexico in the 1990s doubled.

Criticism

Opponents of Mexico's entry into NAFTA argue that only a small stratum of the elite benefits from the agreement, while ordinary workers hardly felt the benefits of membership in the union. The country maintains relatively low wages. Foreign investors are rushing there in many respects precisely for this reason, since low staff costs give big profits.

Also, Mexican opponents of NAFTA believe that by joining the union, the country has become even more dependent on the States. Thus, a possible departure from the established policy of restructuring and liberalization will be difficult, and a return to independence in the economy will be completely impossible.

Changes in Canada

By joining NAFTA, Canada had very specific objectives. The priority goal was to expand the opportunities for companies to enter the US market. Canadian exporters were going to increase their own export opportunities and gain unlimited access to Mexico for their capital. The Latin American country was perfectly suited and is suitable for the withdrawal of labor-intensive industries there.

In Ottawa, there was also a bet that the developed US economy would help structural reforms in Canada itself. The social and financial development of the country really accelerated. In NAFTA, Canada is more prominent than Mexico, but less prominent than the US. Therefore, the neighbors of the States often come out with solidarity points of view, thus protecting their interests in front of Washington. Similar incidents were repeated several times in the 1990s. Mexico received support from Canada when the Mexican peso threatened to collapse.

Problems and challenges

Of course, the North American Free Trade Area has its downsides. The United States (and to a lesser extent Canada) has experienced job losses. It was caused by the transfer of part of the production to Mexican jurisdiction. This circumstance had a noticeable effect on employment in many industries in the United States. The chemical and textile industries, as well as the automotive industry, suffered the most.

The largest American corporations moved their production to Mexico: General Motors, Chrysler, Hess, etc. Trade unions oppose such a policy, which periodically organize mass actions throughout the country. The expansion of trade between Canada, the United States and Mexico, as well as the growth of imports of American goods from neighboring countries, lead to an increase in the deficit in the US trade balance.

For the States, with the advent of NAFTA, the situation on the agricultural market has not changed for the better. Mexico's competition has intensified in this industry. This pattern is especially noticeable in the example of bananas, tomatoes and citrus crops. The increase in the supply of agricultural products from Mexico requires the modernization of control over the quality of goods. This is due, among other things, to the fact that pesticides banned in the United States are used in agriculture in a Latin American country.

North American Free Trade Area (NAFTA)- a free trade agreement between Canada, the United States and Mexico, based on the model of the European Community (European Union).

The initiator and leader of the association is the United States, which combined its financial and innovative power with the richest natural and cheap labor resources of Mexico, fundamentally expanded the markets for American competitive products. American TNCs permeate all of North America. Not the last role is played by the geopolitical ambitions of the United States, which consider Mexico as a gateway to Latin America - a start for the creation of a pan-American free trade area covering the entire American continent (FTAA).

The first step was the "Abbott Plan" adopted in 1947, the purpose of which was to stimulate US investment in the leading sectors of the Canadian economy. In 1959, the United States and Canada entered into an agreement on joint military production, which promoted the implementation of American standards in the Canadian production of military equipment.

The next step was the conclusion in 1965 of an agreement on the liberalization of trade in automotive products, which contributed to the integration of many other industries. The idea of a trade and political unification of the United States, Canada and Mexico began to be implemented in the 1970s. At first, it was about the formation of an energy union. A similar idea was supported in the 1980s by Presidents R. Reagan and George W. Bush.

In September 1988, after three years of difficult negotiations, the US-Canadian Free Trade Agreement (CUSFTA) was signed, according to which a free trade zone was to be formed between the US and Canada within ten years.

The Agreement Establishing the North American Free Trade Association (NAFTA) entered into force on January 1, 1994, maintaining and reaffirming the 1988 US-Canada Free Trade Agreement (CUSFTA).

Mexico's gain is that the flow of capital from the United States, especially direct investment, made it possible to restructure the economy and gave impetus to the development of infrastructure (roads, bridges, telecommunications, etc.). The share of American TNCs in the total amount of foreign investment amounted to approximately 2/3. In the north of Mexico, the maquiladoras, the assembly plants of American TNCs, became the main economic units. This allowed Mexico to dramatically increase its exports of finished products to the United States. The US share of Mexican foreign trade has risen to 90%. Up to 500,000 Mexican braceros enter the United States every year. Their financial transfers to their homeland reach 10 billion dollars a year, which is comparable to Mexico's income from oil exports.

NAFTA Goals

NAFTA is now the world's largest regional free trade area, with a population of 406 million and a combined gross domestic product of $10.3 trillion. The North American Free Trade Agreement contains a set of agreements that extend beyond trade to services and investment, and for the first time brings together industrialized nations and a developing country. The creation of a free trade zone in the North American region was due to a number of factors:

geographical proximity of the participating countries and elements of complementarity of the structures of national economies;

close trade ties between them and expanding industrial cooperation;

a growing network of subsidiaries of US TNCs in Canada and Mexico and Canadian TNCs in the US;

strengthening the positions of the EU, Japan and the newly industrialized countries in the world market.

The main goal of NAFTA was to remove barriers to trade in goods between participating countries. Half of the barrier restrictions were removed immediately, the rest were removed gradually over 14 years. Such an agreement became an expanded version of the 1989 trade agreement between Canada and the United States.

removal of barriers and stimulation of the movement of goods and services between the countries-participants of the agreement;

creation and maintenance of conditions for fair competition in the free trade zone;

attraction of investments to the countries-members of the agreement;

ensuring proper and effective protection and protection of intellectual property rights in the Zone;

creation of effective mechanisms for the implementation and use of the Agreement, joint dispute resolution and management;

establishing a basis for future trilateral, regional and international cooperation in order to expand and improve the Agreement.

Structure of NAFTA

NAFTA has a clear organizational structure. The central institution of NAFTA is the Free Trade Commission, which includes representatives at the level of trade ministers from the three participating countries. The Commission oversees the implementation and further development of the Agreement and helps resolve disputes arising from the interpretation of the Agreement. She also oversees the work of more than 30 NAFTA committees and working groups. The last meetings of the Commission were held in Washington, USA in 1997 and in Mexico City in early 1998.

Ministers agreed that the Commission would be assisted in its work by the NAFTA Coordinating Secretariat (NCS), which was scheduled to be established by the end of 1997 in Mexico City. The secretariat is intended to serve as the official archive of NAFTA's work and to act as a working secretariat to the Commission.

NAFTA envisages further work to help achieve the establishment of a free trade area. In accordance with the Agreement, with the aim of facilitating trade and investment. more than 30 working groups and committees have been established to ensure the effective implementation and administration of NAFTA rules. Key areas of norm-setting work include the origin of goods, customs, agricultural trade and subsidies to this area of the economy, the standardization of goods, government shipments, and the movement of young people across borders. These working groups and committees report annually to the NAFTA Commission.

NAFTA Working Groups and Committees also help to make the NAFTA implementation process smoother, providing a forum for exploring ways to further liberalize trade among participating countries. An example is the consistent policy of Canada aimed at the accelerated reduction of tariffs on certain types of goods. In addition, NAFTA working groups and committees create a politically free arena for discussion of contentious issues and, by using the discussion of problems at an early stage of their development, help to avoid dispute resolution procedures.

Today, much of the trade that takes place in North America is carried out in accordance with the clear, concise and well-established rules of NAFTA and the World Trade Organization (WTO). However, despite this, in the field of trade of this magnitude, contentious issues invariably arise. When such situations arise, NAFTA advocates amicable resolution of the dispute by the states whose interests are affected, with the help of committees and working groups of NAFTA or other advisory bodies. In the event that a mutually acceptable solution is not found, NAFTA provides for a speedy and effective consideration of the problem by a group of experts.

The administration of NAFTA's dispute resolution provisions is vested in the Canadian, American, and Mexican national sections of the NAFTA Secretariat. In the first nine months of fiscal year 1996-97, the Secretariat appointed 14 panel reviews under Chapter 19 of the Agreement and one arbitration panel under Chapter 20. In 1996, there were eight panel decisions under Chapter 19 and one panel report under Chapter 20.

The twentieth chapter of the North American Free Trade Agreement establishes the institutional mechanism and procedure for resolving disputes. At the end of 1996, 11 consultations were requested under this chapter in 10 cases, one of which was submitted for arbitration. The fourteenth chapter additionally stipulates special procedures for resolving any disputes relating to financial services.

Based on the Canadian-American Free Trade Agreement (FTA), NAFTA includes (in Chapter 19) a unique system of review by experts representing two countries of national decisions on anti-dumping and countervailing duties, thereby replacing legal review and each of the three countries . Since the adoption of NAFTA, there have been 73 requests for review by a panel of experts, in accordance with Chapter 19 of the Agreement.

As regards the resolution of investment-related issues, NAFTA uses “mixed” arbitration procedures between the investor whose interests are being harmed and the government concerned, based on the general procedures established by the Canadian Foreign Investment Protection Agreements and the World Banking Investment Dispute Resolution Center. . NAFTA also requires national agencies to respect the principles of fairness and transparency.

The national sections of NAFTA are also responsible for resolving disputes over other free trade agreements entered into by these countries outside of NAFTA. Thus, as early as 1997, the Canadian Section of the NAFTA Secretariat was given responsibility for administering the dispute resolution process under Chapter 8 of the Canada-Israel Free Trade Agreement, and the same responsibility under the Canada-Chile Free Trade Agreement.

Economic characteristics of NAFTA

The difference in GDP per capita between Mexico and the United States reaches 6.6 times, and with Canada - 4.1 times. Such a significant gap in the levels of economic development of the member countries makes it difficult to create a single economic complex.

It is also worth noting that inside NAFTA, unlike the EU and APEC, there is only one center of economic power - the United States, whose economy is several times larger than Canada and Mexico combined. This monocentricity facilitates governance (the leading country can easily impose its decisions on weaker partners), but at the same time creates an environment of potential conflicts (US partners may be dissatisfied with their subordinate position). In addition, integration is one-sided: Canada and Mexico are closely integrated with the US, but not with each other.

However, the United States received significant benefits from this agreement:

American companies opened up much wider opportunities for access to the markets of neighboring countries, which expanded the sales market.

The participation of the United States in the regional integration process has become a powerful factor in the long-term positive impact on domestic economic development.

Characteristics of NAFTA countries (as of 2013)

Country	Population, million people	Size of real GDP, billion US dollars	Size of GDP per capita, thousand US dollars	Inflation, %	Unemployment rate, %	Trade balance, USD billion
Canada
Mexico

Source - CIA World Factbook

On the role of Mexico in NAFTA

For Mexico, membership in NAFTA means guaranteed access to the US market, absorbing approx. 80% of all Mexican exports, increased foreign investment. The desire for economic integration with the United States was the impetus for the neoliberal reforms undertaken by the Mexican government back in the early 1980s, abandoning the import-substituting development strategy.

Critics of Mexican NAFTA membership point out that it benefits almost exclusively the elite, not the working people. The attractiveness of Mexico for foreign entrepreneurs is largely due to the low standard of living (low wages) and low environmental standards. Therefore, the United States does not show a strong interest in improving the living standards of Mexicans.

On Canada's role in NAFTA

Canada is an objectively stronger NAFTA member than Mexico, but weaker than the US. Therefore, Canada is inclined to block with Mexico in defending its interests, in order to put pressure on Washington. In the early 1990s, Canada relied on the support of Mexico to counter the protectionist actions of the United States. In turn, Mexico received in 1995 the support of Canada when applying to the IMF and IBRD, when it became necessary to urgently intervene to save the Mexican peso.

Participation in KUFTA and NAFTA gave a strong impetus to the Canadian economy: in 1989-2000 alone, the volume of Canadian exports more than doubled, the share of machinery and equipment in it increased from 28% in 1980 to 45% in 1999. This refutes the fears of those opponents of the free trade agreement on the North American continent, who believed that it would lead to the "de-industrialization" of the Canadian economy.

There are no permanent supranational bodies in NAFTA. As a rule, all decisions are taken by the highest officials of the partner countries. The main provisions of the Agreement are reduced to the elimination of tariff barriers in trade in goods and services between the United States, Canada and Mexico.

The NAFTA agreement had a constructive impact on the economic relations of the participating countries. The action of the treaty is aimed at liberalizing relations between the United States and Mexico and between Canada and Mexico, since relations between the United States and Canada were liberalized within the framework of a bilateral free trade area created in 1988.

The provision of the Agreement in the field of investment cooperation establishes a non-discriminatory regime for investors of the participating countries in the creation of enterprises (FDI), the acquisition of companies, their expansion and management. Investors have the right to repatriate profits and capital, to receive fair compensation in the event of expropriation, to settle disputes in government arbitration. This removal of barriers has led to a significant increase in investment within NAFTA.

The main sources of investment in NAFTA are TNCs. Their activities are concentrated mainly in the knowledge-intensive industries (in the US and Canada) and in the manufacturing industry (in Mexico). As a result of the Agreement, the volume of mutual investments in the period 1994 to 2008 increased 6 times. Investment cooperation was carried out according to the scheme USA - Canada, USA - Mexico.

The sectoral structure of mutual investments of the USA, Canada and Mexico is different. Mutual FDI between the US and Canada, as well as other developed countries, is mainly concentrated in the service sector - banking and financial, while in Mexico these countries invest mainly in the manufacturing sector.

FDI has a positive impact on the economy of the host country only if there is a clear and competent government program of interaction with foreign investors. In the absence of such a program, FDI can negatively affect the further economic growth of the country.

Integration within the framework of NAFTA greatly contributed to the development of trade, specialization of production and the introduction of modern technologies in various sectors of the economy. Intra-zonal trade grew at a faster rate than US, Canal, and Mexico trade with other countries. The NAFTA treaty also contributed to the process of integration in the service sector (financial sector, trade, transport, healthcare and communications) and in matters of protection of intellectual property.

The asymmetry in the development of NAFTA includes the asymmetry: in the industrial potentials of the participating countries, resulting from the fact that the United States accounts for about 85% of the GDP and industrial production of the three countries; levels of development between highly developed countries (USA and Canada) and developing Mexico; intensity of bilateral economic relations (USA - Canada, USA - Mexico); lack of mature economic relations between Canada and Mexico.

As one of the priority areas for the development of integration processes with the participation of NAFTA, the United States considers the countries of Latin America. NAFTA in the future may become the basis of the future Inter-American Free Trade Area (FTAA), the creation of which has been postponed for the time being. The Caribbean and Central American regions are now more integrated into NAFTA than with their grouping partners, not only in terms of trade and finance, but also at a deeper level of industrial integration.