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Office of Economic and Small Business Development Homepage
Broward County Policy On North America Free Trade Agreement (NAFTA )

Background

The North American Free Trade Agreement, implemented on January 1, 1994 and designed to phase out all duties and tariffs on goods traded between the U.S., Canada, and Mexico, now enters its 12th year. An expansion of the 1989 U.S-Canada Trade Agreement, NAFTA differs from the European Union (EU) in that it did not establish a supra-national governing body or currency, and is viewed under international law as a treaty. NAFTA is widely accepted as the first step toward the goal of formation of a Western Hemispheric Free Trade Area of the Americas.

Advantages

According to the Office of the U.S. Trade Representative, in the 12 years of NAFTA’s existence, trade between the three nations has grown 173% to $810 billion. U.S. merchandise exports to NAFTA partners has grown by 133%, compared to 77% to the rest of our global trade partners. Canada and Mexico rank 1st and 2nd as U.S. export markets, accounting for 36% of all U.S. export growth last year. Real GDP in the U.S., Canada, and Mexico has grown by 48%, 49%, and 40% respectively over the 12 years of NAFTA. According to the U.S. Department of Commerce, Canada is the 2nd largest importer for Florida-Origin goods (2nd only to Brazil), and experienced a 12.9% growth in Florida-Origin exports in 2005, to $2.8 billion. Mexico is the 4th largest importer of Florida-Origin goods and experienced growth of 12.8% in the same period to just over $2 billion. Enterprise Florida states that as of their most recent data (2003), while Europe is the largest collective source of foreign direct investment (FDI) in Florida, NAFTA partner Canada is the single largest individual nation source of FDI in the state at $5.5 billion in that year.

Disadvantages

While growth and investment statistics provide a very positive track record and outlook for NAFTA, the agreement is not with its critics and criticisms. While much debate continues regarding the actual numbers, there is consensus that well over 500,000 and maybe as many as 1 million American job losses can be attributed to NAFTA and movement of production to Mexico under the agreement. Wage, quality of life, working conditions, and environmental standards have not improved at the rates proponents of NAFTA had hoped for, and supplemental agreements have been undertaken in an attempt to improve environmental and labor standards in Mexico. Additionally, some critics sight U.S. agricultural subsidies as a critical source of downward pressure on agricultural prices in Mexico, leading to Mexican farm bankruptcies and wage declines. The combination of substandard working conditions, low wages and farm bankruptcies are seen as major contributors to illegal immigration to the U.S.

Conclusion

Given the well documented benefits to Broward County created by NAFTA the Broward County OED recommends the continued support of the agreement.

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