Why establish the North American Free Trade Area?

After years of negotiations, the North American Free Trade Agreement signed by the United States, Canada and Mexico finally came into effect at 1994 1. According to this agreement, the tariff of free trade zone will be completely reduced to zero within 15 years.

Before the signing of NAFTA, the United States and Canada signed the US-Canada trade agreement at 1989. From the Canadian point of view, American protectionism became more and more serious in the1980s, and the American government increasingly relied on anti-dumping, anti-export subsidies, voluntary export restraints and other trade protection measures. Many Canadian products are deeply hurt by these policies. At the same time, Canada also feels the strong pressure of accelerating globalization. Asian manufacturing has a great influence on Canadian manufacturing. If Canadian enterprises do not adjust, they will inevitably lose market in the competition with Asian manufacturing. Signing a free trade agreement with the United States is an important solution for Canada to meet the challenges of American protectionism and globalization.

Similar to Canada, Mexico hopes to ensure the opening of the American market through free trade agreements. However, before the mid-1980s, Mexico and most Latin American countries adopted the strategy of import substitution industrialization, requiring the state to protect the manufacturing industry and expecting the state to replace imports by developing manufacturing industry. During the same period, East Asia International adopted an export-oriented development strategy, and their growth greatly envied Latin America. 1982 After the debt crisis, Mexico finally decided to abandon the import substitution industrialization strategy, open the domestic market, rely on the market economy, implement economic reform, and start the privatization of the national economy. In order to attract foreign investment to participate in the privatization process, increase the credibility and durability of Mexico's reform, and avoid the influence of domestic political changes and policy changes on Mexico's economic reform, the Mexican government decided to lock in the economic reform process through international treaties, which played such an important role.

For the United States, the political significance of the North American Trade Agreement is far greater than the economic significance. Although Canada is the largest trading partner of the United States, the benefits of free trade with Canada have been reflected in the signing of the US-Canada Free Trade Agreement. From the perspective of the United States, Mexico is a very small economy. However, Mexico is Spain's most populous country in the world and the second largest GDP country in Latin America. It is regarded as a leading country in Latin America, and its economic reform has become an example for Latin American countries to learn. Through NAFTA, the United States can send an important message to Latin American countries, that is, it is worthy of recognition to take the road of market economy. At the same time, the three countries of North America have carried out close cooperation and exchanges in commerce, education, environment, labor, sports and even art through bilateral or 300-year mechanism. In addition, the United States can better solve the problems of illegal immigration and the development of towns on the border with Mexico.

The above is an analysis of the reasons for the establishment of NAFTA. Your criticisms and suggestions are welcome!