NAFTA Driving Growth Across North America

According to “The NAFTA Success Story,” a report from Canada’s Scotiabank, “Since it became effective in 1994, the North American Free Trade Agreement (NAFTA) has been a major success for its three member countries, the United States, Canada, and Mexico.”

The report notes that NAFTA is a net contributor to American employment and has delivered more jobs than it eliminated. “Parsing NAFTA’s impact on Canadian employment is less clear-cut owing to the relatively volatile value of the Canadian dollar. Formal employment in Mexico has expanded principally in its border states as a result of NAFTA,” the report adds.

Also included in the report is a case study about the auto industry, which is heavily integrated among the three countries. It concludes: “NAFTA has allowed North American, and more specifically US, auto production to maintain its global position, not retreat.”

However, the report does recommend minor changes to the agreement. “Updating NAFTA to cover the advent of e-commerce (which didn’t exist in 1994), expanding trade in services, and improved protection for intellectual property is a win-win-win proposition. Similarly, the new US administration’s apparent interest in revamping NAFTA’s dispute settlement mechanisms may benefit both Canada and Mexico, which have fared relatively poorly compared with the US under the existing system.”


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