Page 258 - DECO503_INTERNATIONAL_TRADE_AND_FINANCE_ENGLISH

International Trade and Finance

Notes NAFTA has two supplements : the North American Agreement on Environmental Cooperation
(NAAEC) and the North American Agreement on Labor Cooperation (NAALC).
Negotiation and U.S. Ratification

Following diplomatic negotiations dating back to 1986 among the three nations, the leaders met in
San Antonio, Texas, on December 17, 1992, to sign NAFTA. U.S. President George H. W. Bush,
Canadian Prime Minister Brian Mulroney and Mexican President Carlos Salinas, each responsible
for spearheading and promoting the agreement, ceremonially signed it. The agreement then needed
to be ratified by each nation’s legislative or parliamentary branch.
Before the negotiations were finalized, Bill Clinton came into office in the U.S. and Kim Campbell in
Canada, and before the agreement became law, Jean Chrétien had taken office in Canada.

SAARC created a free trade area of 1.6 billion people to Bangladesh, Bhutan, India,
Maldives, Nepal, Pakistan and Sri Lanka.

The proposed Canada-U.S. trade agreement had been very controversial and divisive in Canada, and
the 1988 Canadian election was fought almost exclusively on that issue. In that election, more
Canadians voted for anti-free trade parties (the Liberals and the New Democrats) but the split caused
more seats in parliament to be won by the pro-free trade Progressive Conservatives (PCs). Mulroney
and the PCs had a parliamentary majority and were easily able to pass the Canada-US FTA and
NAFTA bills. However, he was replaced as Conservative leader and prime minister by Kim Campbell.
Campbell led the PC party into the 1993 election where they were decimated by the Liberal Party
under Jean Chrétien, who had campaigned on a promise to renegotiate or abrogate NAFTA; however,
Chrétien subsequently negotiated two supplemental agreements with the new US president. In the
US, Bush, who had worked to “fast track” the signing prior to the end of his term, ran out of time and
had to pass the required ratification and signing into law to incoming president Bill Clinton. Prior to
sending it to the United States Senate, Clinton introduced clauses to protect American workers and
allay the concerns of many House members. It also required US partners to adhere to environmental
practices and regulations similar to its own.
With much consideration and emotional discussion, the House of Representatives approved NAFTA
on November 17, 1993, 234-200. The agreement’s supporters included 132 Republicans and 102
Democrats. NAFTA passed the Senate 61-38. Senate supporters were 34 Republicans and 27 Democrats.
Clinton signed it into law on December 8, 1993; it went into effect on January 1, 1994. Clinton while
signing the NAFTA bill stated that “NAFTA means jobs. American jobs, and good-paying American
jobs. If I didn’t believe that, I wouldn’t support this agreement.”
Provisions

The goal of NAFTA was to eliminate barriers to trade and investment between the US, Canada and
Mexico. The implementation of NAFTA on January 1, 1994 brought the immediate elimination of
tariffs on more than one-half of Mexico’s exports to the U.S. and more than one-third of U.S. exports
to Mexico. Within 10 years of the implementation of the agreement, all US-Mexico tariffs would be
eliminated except for some U.S. agricultural exports to Mexico that were to be phased out within 15
years. Most U.S.-Canada trade was already duty free. NAFTA also seeks to eliminate non-tariff trade
barriers and to protect the intellectual property right of the products.
In the area of intellectual property, the North American Free Trade Agreement Implementation Act
made some changes to the Copyright law of the United States, foreshadowing the Uruguay Round
Agreements Act of 1994 by restoring copyright (within NAFTA) on certain motion pictures which
had entered the public domain.

252 LOVELY PROFESSIONAL UNIVERSITY