The North AmericanFree Trade Agreement

Accord de libre-échange nord-américainTratado de Libre Comercio de América

del NorteBy Marlene Aldana

HISTORY

• The Agreement phases out most tariffs between the United States, Canada, and Mexico.

• Tariffs, which are taxes on imports, increase the price of foreign goods and thereby benefit domestic producers.

• The participants in NAFTA agreed to reduce tariffs by 50 percent immediately and to reduce them to zero over the following 15 years.

• Industries suffering the most because of the increased competition from foreign goods would be given extra time to adjust to the elimination of tariffs on their foreign competitors' products.

•NAFTA, the North American Free Trade Agreement, went into effect on January 1, 1994.

THE NAFTA SUPERCORRIDORS

Texan farmers are angry because this highway will cut across their farm lands and end generations of producing crops.

The globalists and foreign investors are behind it, paying off politician so that they can take control of the infrastructure of America, starting with Texas, it did not pass through congress and the American people are not being told the truth.

They want to shut down and bulldoze the farms and set up a big corporate farm, ending generations of farming by Texans.

The governments of Mexico, The United States and Canada made a partnership with NAFA that would involve the construction of the Trans-Texas corridor stretching 400 miles from Laredo to Oklahoma. The largest land grab in Texan history.

CRITICS AND CONTROVERSIAS

NAFTA helps keep U.S. Companies in the U.S. The average U.S. tariff on Mexican imports is only 4 percent, not a significant amount of protection, and the United States has not been flooded by imports from Mexico to date.

American companies are free to move without the NAFTA, but NAFTA actually reduces current incentives to move, thereby eliminating many market distorting regulations in Mexico (like local content requirements).

These have forced U.S. plants wishing to sell in that market to locate in Mexico. Some companies set up operations south to get around high Mexican tariffs.

Those tariffs will be zero at the end of NAFTA implementation. Eliminating barriers to U.S. exports cannot encourage companies to move production to Mexico.

NAFTA DEBATEThe debate on NAFTA, and United States foreign trade in general, usually centers on the potential negative effects of imports on the economy.

It is relatively easy to identify who is harmed, because imports displace workers in industries where the comparative advantage lies elsewhere. At the same time, others benefit.

Firms whose exports increase clearly benefit. Consumers get the same or higher quality products at lower costs.

Are these gains costless? No; some firms lose sales and some individuals lose their jobs.

Is protecting firms or industries that are likely to lose costless? No;

We lose the gains from trade, and those who would have benefited because they could have increased exports never get the chance to do so.

What are the Banana Wars• Unofficial term given to the United Sates Military interventions into Central and

South America• Lasted over 6years• United Fruit company had significant financial stakes invested within banana,

tobacco and sugar cane production throughout Caribbean, South and Central America

• From the E.U giving banana producers from former colonies in the Caribbean special access to European Trade markets, the U.S felt this broke trade rules

The EUThe USA

VS

Banana Consumption

• 7% Europe's Bananas come from Caribbean

• US Multinationals control 75% of the E.U market

• The USA do not export bananas to the E.U

• The U.S filed a complaint over the E.U with the WTO

• The WTO backed The US in 1997 over this complaint

• The E.U was required to alter their trading rules

E.U and Caribbean• 1975 – Each Caribbean country had a

quota for bananas• This enabled them to sell to Europe as

many as they wanted to support• E.U felt this would be more beneficial to

LDC’s economies in terms of growing independently and not relying on overseas aid

• Setup to protect banana farmers in The Caribbean

• US Multinationals setup mechanised plantations in Latin America

• Latin America therefore had an advantage because bananas were grown in large masses using mechanised plantations

USA Import Duty

• After WTO ruling the US Government continued to argue that free trade in bananas had not been restored

• The E.U argued that it had changed its rules

• The US has now imposed a retaliatory range of 100% import duty on European Products

• These range through the E.U’s entire range of products

• Whiskey, Cashmere and Wine

USA vs. EU• The USA does not export bananas directly to

Europe• Why so angry?• The USA is concerned about their economy• Trade deficit is at a 9 year high of

$3,000,000,000• US Government feel it cant afford any EU

protectionism• No matter how petty to disadvantage its

troubled trading balance• US government pressurised by Multinationals

who dominate Latin Banana Industry• Multinationals would regularly make

contributions to the US Government

Effects in Europe

The US have enforced import duty on European Products which works as bond which Europe's exporters must pay to US customs to cover duties

Risks in Europe

• E.U exports worth $520m are at risk

• Thousands of jobs at risk

• European Economies at risk

Effects in Developing World

• Bananas crucial to Caribbean economy

• Half of the Caribbean Population rely on the banana industry

• This supplies them with food, shelter and education

• If the E.U withdraws its preferential treatment without giving farmers enough time to find alternative uses of their land the Caribbean economy could collapse

• 71 African, Caribbean and Pacific states receive this preferential treatment from The E.U

Conclusion

• The results and consequences of Banana wars have and continue to have an effect worldwide

• The US and E.U have to assess and change trading policies

• LCD’s are heavily dependent on E.U preferential treatment as their large sectors of their economy rely on the export of bananas

References

• www.guardian.co.uk

• www.wikipedia.co.uk