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Unit 23 : Regionalism : EU and NAFTA

(ii) All of the following are regional trade organizations EXCEPT Notes
(a) NAFTA. (b) NATO.
(c) the EU. (d) Mercosur.
(e) None of the above.
(iii) NAFTA is an agreement signed by the governments of
(a) Canada (b) Mexico
(c) the United States (d) All of these
(iv) NAFTA is implemented on
(a) Jan. 1994 (b) June 1993
(c) March 1990 (d) May 1998
23.3 Summary

• NAFTA (North American Free Trade Agreement) is the cooperation of free trade in North
America that aims to facilitate member states in the fields of economics ranging from the release
of tariffs and barriers to trade and the production of certain goods to the fair treatment of
foreign investors to invest in their individual member countries (Krimawati). Its members are
Canada, Mexico, and the United States. NAFTA is the second largest free trade area after the
European (Vogel, 2009).
• United States and Canada have entered into free trade cooperation since 1988. Economic
cooperation is limited to bilateral cooperation aimed at improving the condition of the Canadian
economy worsened due to rising unemployment and the number of Canadian companies are
moving their investment into the United States. Cooperation is considered as the embryo of the
NAFTA.
• NAFTA was established in 1989 in Washington DC through trade agreement between Canada
and the United States, which was attended by representatives of each. This agreement resulted
in an agreement to eliminate or reduce tariffs between the two countries. In December 1992,
NAFTA was signed by the presidents of the three countries, namely Brian Mulroney (Canada),
Carlos Salinas de Gortari (Mexico), and George H. W. Bush (United States). The signing of
NAFTA should be followed by a legislative ratification of the three countries. However, the
United States legislature apparently alarming environmental and labor issues. Therefore, added
the two agreements, each devoted to labor issues and environmental issues. Just beginning to
be implemented NAFTA on January 1, 1994 (www.fas.usda.gov, 2009).
• Canada and Mexico are the second export market and the third largest for the United States.
Commencing in 1992-1998, the value of U.S. agricultural exports increased by 26%, while
accounting for 1997-1998, exports of food and food United States to Mexico increased from 881
million to 5.9 billion Dollars Dollars. This is the biggest level for 5 years in NAFTA. Mexico
itself is a major target of U.S. food exports, and the United States have a supply of 75% of
Mexican food imports. While Canada has been a stable market for U.S. food trade by increasing
food exports by 10% every year from 1990 to 1998. Food in question is fruits, vegetables, snacks
and other food consumption.
• Canada and Mexico needs the United States as an aid donor and the economies of both countries
are deteriorating. For Canada and Mexico, NAFTA is the arena of competition among members.
Mexico especially, most look very dependence on the United States in the economic sector.
• NAFTA can be regarded as one of the simplest forms of regionalism in the form of free trade
areas. The relationship between the extent of member states in free trade relations in which
each member benefits. Interests of members of the three countries in NAFTA of course not only
on the economic sector. These countries also have a political interest, such as Mexico and
Canada that require the United States to increase its bargaining position in economic assistance.
NAFTA itself was established in order to offset the power of the new European Union.

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