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{{redirect|NAFTA|other uses of the acronym|Nafta (disambiguation)}}

{{Infobox Geopolitical organization
| native_name =<div class="NavFrame" style="border-style:none;padding:0;">
<div class="NavHead" style="font-size:1.1em; background:#f9f9f9;text-align:center;"><small>The North American<br />Free Trade Agreement</small></div><div class="NavContent" style="font-size:0.8em; text-align:center; display:none; line-height: 0.8em;">
{{lang|fr|''ccord de libre-échange nord-américain''}} {{pt icon}}<br />
{{lang|es|''Tratado de Libre Comercio de América del Norte''}} {{es icon}}
</div></div><br />
|linking_name = the North American Free Trade Agreement
|image_flag =
|image_coat = NAFTA logo.png
|symbol_type = Emblem
|image_map = Map of NAFTA.svg
|membership = {{CAN}}<br />{{MEX}}<br />{{USA}}
|admin_center_type = Secretariats
|admin_center = [[Mexico City]], [[Ottawa]] and [[Washington, D.C.]]
|languages_type = Official languages
|languages = [[English language|English]], [[French language|French]] and [[Spanish language|Spanish]]
|leader_title1 =
|leader_name1 =
|leader_title2 =
|leader_name2 =
|established_event1 = Formation
|established_date1 = [[1 January]] [[1994]]
|established_event2 =
|established_date2 =
|area_rank = 1st
|area_magnitude = 1 E13
|area_km2 = 21,783,850
|area_sq_mi = 8,410,792 <!--Do not remove per [[WP:MOSNUM]]-->
|percent_water = 7.4
|population_estimate = 445,335,091
|population_estimate_rank = 3rd
|population_estimate_year = 2008
|population_census =
|population_census_year =
|population_density_km2 = 20.4
|population_density_sq_mi = 52.9<!--Do not remove per [[WP:MOSNUM]]-->
|population_density_rank = 195th
|GDP_PPP = $15,857 billion
|GDP_PPP_rank = 1st
|GDP_PPP_year = 2007 ([[International Monetary Fund|IMF]])
|GDP_PPP_per_capita = $35,491<!--2006 figure, anyone have 2007-->
|GDP_PPP_per_capita_rank = 14th<!--Note that ranking is corrected by taking out NAFTA members from the list-->
|GDP_nominal = $15,723 billion
|GDP_nominal_rank = 2nd
|GDP_nominal_year = 2007 ([[International Monetary Fund|IMF]])
|GDP_nominal_per_capita = $35,564<!--2006-->
|GDP_nominal_per_capita_rank = 18th<!--Note that ranking is corrected by taking out NAFTA members from the list-->
|official_website = http://www.nafta-sec-alena.org
}}

The '''North American Free Trade Agreement''' ({{lang-es|Tratado de Libre Comercio de América del Norte}} [TLCAN], {{lang-fr|Accord de libre-échange nord-américain}} [ALENA]) is a trilateral [[trade bloc]] in [[North America]] created by the governments of the [[United States]], [[Canada]], and [[Mexico]]. The North American Free Trade Agreement (NAFTA) has two supplements, the [[North American Free Trade Agreement#North American Agreement on Environmental Cooperation|North American Agreement on Environmental Cooperation]] (NAAEC) and the [[North American Free Trade Agreement#North American Agreement on Labo(u)r Cooperation|North American Agreement on Labo(u)r Cooperation]] (NAALC). The agreements came into effect on [[January 1]], [[1994]]. In terms of combined [[purchasing power parity]] [[GDP]] of its members, {{as of|2020|lc=on}} the trade bloc is the [[Trade bloc#Most active regional blocs|largest]] in the world and second largest by nominal GDP comparison.

==Supplemental agreements==
===North American Agreement on Environmental Cooperation===
<!-- This section is linked from North American Free Trade Agreement -->
The [[North American Agreement on Environmental Cooperation]] (NAAEC) was a response to [[environmentalism|environmentalists]]' concerns that the [[United States]] would lower its standards if the three countries did not achieve consistent environmental regulation. The NAAEC only obligates parties to enforce their own environmental laws. The NAAEC, in an endeavour to be more than a set of environmental regulations, established the North American Commission for Environmental Cooperation, a mechanism for addressing trade and environmental issues, the North American Development Bank (NADBank) for assisting and financing investments in pollution reduction, and the Border Environmental Cooperation Commission (BECC). The NADBank and the BECC have provided economic benefits to Mexico by financing 36 projects, mostly in the water sector.<ref>[http://yosemite1.epa.gov/oia/MexUSA.nsf/61906db6hif41456608825679f006db802/e8896686b162419786256ad9006160b6!OpenDocument Reforming the North American Development Bank (NADBank) and the Border Environment Cooperation Commission (BECC)]</ref>

===North American Agreement on Labo(u)r Cooperation===
<!-- This section is linked from [[North American Free Trade Agreement]] -->
The North American Agreement on Labo(u)r Cooperation (NAALC) supplements NAFTA and endeavors to create a foundation for cooperation among the three countries for the resolution of [[organized labor|labor]] problems, as well as to promote greater cooperation among trade unions and social organizations in order to fight for improved labor conditions.

==Further integration==
While different groups advocate for a further integration into a [[North American Community]], sensitive issues have hindered that process. The three countries have pursued different trade policies with non-members (for example, Mexico has signed [[Free trade agreement|FTAs]] with more than 40 countries in 12 agreements), making the possibility of creating a customs union difficult to accomplish. Former President [[Vicente Fox]] of Mexico had promoted the idea of enhancing NAFTA (into what he labeled "NAFTA-Plus", or possibly a North American Community), but after the [[September 11, 2001 attacks]], priorities in the United States changed. The [[Security and Prosperity Partnership of North America]] was signed, instead, as a separate and unrelated agreement.

Given the scope of the agreement, which includes very sensitive issues in trade talks such as agriculture liberalization and environment regulation, few countries have shown interest in joining NAFTA. Instead, some countries, like [[Chile]], preferred to negotiate three separate bilateral agreements with the three current NAFTA members, with different restrictions to liberalization of their industries and the regulation of environment protection. [[Jamaica]] and [[Trinidad and Tobago]] also showed a similar interest.<ref>[http://www.silvertorch.com/arts/manley1.htm The Caribbean Community]</ref><ref>[http://www.silvertorch.com/arts/gonzales1.htm CARICOM AND NAFTA]</ref><ref>[http://www.caricom.org/jsp/communications/communiques/5inthgc_1994_communique.jsp The 1994 Communique of the CARICOM Heads of Government on NAFTA entry]</ref>

In an interview with [[Larry King]] on [[October 8]], [[2007]], Fox described any plans for a [[North American currency union|North American single currency]] as a "long term, very long term" proposal. He also spoke of he and U.S. President [[George W. Bush]]'s support for the [[Free Trade Area of the Americas]] as a "first step" toward "a new vision" for the Americas, "like we are trying to do with NAFTA", but then said that [[Venezuelan President]] [[Hugo Chávez]] had decided to "destroy the idea".<ref>[http://transcripts.cnn.com/TRANSCRIPTS/0710/08/lkl.01.html CNN Larry King Live - Interview with Vicente Fox], [[CNN]], [[October 8]], [[2007]]</ref>

==History of the implementation==

[[Image:Bill Clinton signing Nafta.gif|thumb|right|President [[Bill Clinton]] signing NAFTA into law, November 1993]]
NAFTA was initially promoted by politicians in the United States and [[Canada]] supportive of free trade, led by [[Canada|Canadian]] Prime Minister [[Brian Mulroney]], U.S. President [[George H. W. Bush]], Mexican President [[Carlos Salinas de Gortari]]. The agreement was pursued by business interests in all three countries <ref>{{cite web
|url = http://query.nytimes.com/gst/fullpage.html?res=9F0CE7DA1431F934A25751C0A965958260
|title = New Venture Stirs Mexico Trade Issue
|work = New York Times
|author = Keith Bradsher
|date = 17 February 1993
|accessdate = 24 September 2008
}}</ref> and opposed by labor, environmental, other business interests, in all three countries. <ref>{{cite web
|url = http://query.nytimes.com/gst/fullpage.html?res=9F0CE1DE1138F933A05753C1A965958260
|title = Canada's Quarrel With Nafta
|work = New York Times
|author = Sam Whiting
|date = 30 0ctober 1993
|accessdate = 24 September 2008
}}</ref><ref>{{cite web
|url = http://query.nytimes.com/gst/fullpage.html?res=9F0CEEDC1139F930A1575AC0A965958260
|title = Nafta Maintains U.S. Environment Standards; Garment Workers' Risk
|work = New York Times
|author = Bertrand Frank, Letter to the Editor
|date = 23 September 1993
|accessdate = 24 September 2008
}}</ref><ref>{{cite web
|url = http://query.nytimes.com/gst/fullpage.html?res=9F0CE2D9143FF937A1575AC0A965958260
|title = Tiny Industry Fears Nafta's Reach
|work = New York Times
|author = Barnaby J. Feder
|date = 24 September 1993
|accessdate = 24 September 2008
}}</ref><ref>{{cite web
|url = http://query.nytimes.com/gst/fullpage.html?res=9F0CE7DA153DF930A25753C1A965958260
|title = Opposites in California Join to Fight Trade Pact
|work = New York Times
|author = Peter T. Kilborn
|date = 13 October 1993
|accessdate = 24 September 2008
}}</ref><ref>{{cite web
|url = http://query.nytimes.com/gst/fullpage.html?res=9F0CEFDD173EF931A25754C0A965958260
|title = News Summary: MEXICAN FEARS OF FREE TRADE
|work = New York Times
|author = New York Times Staff Writers
|date = 12 July 1993
|accessdate = 24 September 2008
}}</ref>
The three countries signed NAFTA in [[December 1992]], subject to ratification by the legislatures of the three countries.

In the United States, NAFTA was able to secure passage after [[Bill Clinton]] made its passage a major legislative priority in 1993. Clinton's [[United States Trade Representative]], [[Mickey Kantor]], was a strong advocate of the treaty. Since the agreement had been signed by Bush under his fast-track prerogative, Clinton did not alter the original agreement, but complemented it with the aforementioned NAAEC and NAALC. After intense political debate and the negotiation of these side agreements, the [[U.S. House of Representatives]] passed NAFTA on November 17, 1993, by 234-200 vote (132 [[U.S. Republican Party|Republicans]] and 102 [[U.S. Democratic Party|Democrats]] voting in favor; 43 Republicans, 156 Democrats, and 1 [[political independent|independent]] against),<ref>[http://clerk.house.gov/evs/1993/roll575.xml House Roll Call]</ref> and the [[U.S. Senate]] passed it on the last day of its 1993 session, November 20, 1993, by 61-38
vote (34 Republicans and 27 Democrats voting in favor; 10 Republicans and 28 Democrats against, with 1 Democrat opponent not voting -- Sen. [[Byron Dorgan]] ([[Democratic Party (United States)|D]]-[[North Dakota|ND]]), an ardent foe of NAFTA, missed the vote because of an illness in his family).<ref>[http://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=103&session=1&vote=00395 Senate Roll Call]<br />{{cite news |author=Krauss, Clifford |title=In finagling on trade pact, legislators' barter is votes |url=http://query.nytimes.com/gst/fullpage.html?res=9F0CE4D8113CF936A35753C1A965958260&sec=&spon=&pagewanted=all |work=[[The New York Times]] |date=[[October 5]] [[1993]] |page=B10}}<br />{{cite news |author=Garrett, Major |title=After emotionless debate, Senate votes for NAFTA |url=http://nl.newsbank.com/nl-search/we/Archives?p_product=WT&p_theme=wt&p_action=search&p_maxdocs=200&p_text_search-0=After%20AND%20emotionless%20AND%20debate,%20AND%20Senate%20AND%20votes%20AND%20for%20AND%20NAFTA&s_dispstring=After%20emotionless%20debate,%20Senate%20votes%20for%20NAFTA%20AND%20date(11/21/1993%20to%2011/21/1993)&p_field_date-0=YMD_date&p_params_date-0=date:B,E&p_text_date-0=11/21/1993%20to%2011/21/1993)&p_perpage=10&p_sort=YMD_date:D&xcal_useweights=no |work=[[The Washington Times]] |format=paid archive |date=[[November 21]] [[1993]] |page=A6}}</ref>

== Effects ==
{{details|NAFTA's Impact on US Employment}}
The effects of NAFTA, both positive and negative, have been quantified by several economists, whose findings have been reported in publications such as the [[World Bank]]'s ''Lessons from NAFTA for Latin America and the Caribbean'',<ref>Lederman D, W Maloney and L Servén (2005) ''Lessons from NAFTA for Latin America and the Caribbean'': Stanford University Press: Palo Alto, USA</ref> ''NAFTA's Impact on North America'',<ref>Weintraub S (2004), ''NAFTA's Impact on North America The First Decade'', CSIS Press: Washington, USA</ref> and ''NAFTA Revisited'' by the Institute for International Economics.<ref>Hufbauer GC and Schott, JJ, ''NAFTA Revisited'', Institute for International Economics, Washington D.C. 2005</ref> Some argue that NAFTA has been positive for [[Mexico]], which has seen its [[poverty]] rates fall and real [[income]] rise, even after accounting for the 1994&ndash;1995 economic crisis.<ref>[http://www.cato.org/pubs/journal/cj17n3-14.html THE ORIGIN OF MEXICO'S 1994 FINANCIAL CRISIS<!-- Bot generated title -->]</ref> Others argue that NAFTA has been beneficial to business owners and elites in all three countries, but has had negative impacts on farmers in Mexico who saw food prices fall based on cheap imports from U.S. [[agribusiness]], and negative impacts on U.S. workers in manufacturing and assembly industries who lost jobs. Critics also argue that NAFTA has contributed to the rising levels of inequality in both the U.S. and Mexico. Some economists believe that NAFTA has not been enough (or worked fast enough) to produce an economic convergence,<ref>Floudas, Demetrius Andreas & Rojas, Luis Fernando; [http://www.diplomacy.bg.ac.yu/mpro_sa00_4.htm "Some Thoughts on NAFTA and Trade Integration in the American Continent"], 52 (2000) International Problems 371 </ref> nor to substantially reduce poverty rates. Some have suggested that in order to fully benefit from the agreement, Mexico must invest more in education and promote innovation in [[infrastructure]] and [[agriculture]].

===Trade===
According to Hufbauer (2005), overall, NAFTA has not caused [[trade diversion]], aside from a few select industries such as [[textile]]s and apparel, in which [[rules of origin]] negotiated in the agreement were specifically designed to make U.S. firms prefer Mexican manufacturers. The [[World Bank]] also showed that the collected NAFTA imports' percentage growth was accompanied by an almost similar increase of non-NAFTA exports.

===Industry===
[[Maquiladora]]s (Mexican factories which take in imported raw materials and produce goods for export) have become the landmark of trade in Mexico. These are plants that moved to this region from the United States, hence the debate over the loss of American jobs. Hufbauer's (2005) book shows that income in the maquiladora sector has increased 15.5% since the implementation of NAFTA in 1994. Other sectors now benefit from the free trade agreement, and the share of [[export]]s from non-border states has increased in the last five years while the share of exports from maquiladora-border states has decreased. This phenomenon has allowed for the rapid growth of non-border metropolitan areas, such as [[Toluca]], [[León, Guanajuato|León]] and [[Puebla, Puebla|Puebla]]; all three larger in population than [[Tijuana]], [[Ciudad Juárez]], and [[Reynosa]]. The main non-maquiladora industry that has benefited from NAFTA is the automobile industry.

===Environment===
{{details|NAFTA's Impact on the Environment}}
Securing US congressional approval for NAFTA would have been impossible without addressing public concerns about NAFTA’s environmental impact. The Clinton Administration negotiated a side agreement on the environment with Canada and Mexico, the North American Agreement on Environmental Cooperation, NAAEC, which led to the creation of the [[Commission for Environmental Cooperation]] in 1994. To alleviate concerns that NAFTA, the first regional trade agreement between a developing country and two developed countries, would have negative environmental impacts, the CEC was given a mandate to conduct ongoing ''ex post'' environmental assessment of NAFTA.<ref>http://www.ingentaconnect.com/content/beech/iapa/2006/00000024/00000004/art00002</ref>

In response to this mandate, the CEC created a framework for conducting environmental analysis of NAFTA, one of the first ''ex post'' frameworks for the environmental assessment of trade liberalization. The framework was designed to produce a focused and systematic body of evidence with respect to the initial hypotheses about NAFTA and the environment, such as the concern that NAFTA would create a “race to the bottom” in environmental regulation among the three countries, or the hope that NAFTA would pressure governments to increase their environmental protection mechanisms.<ref>http://www.cec.org/programs_projects/trade_environ_econ/pdfs/frmwrk-e.pdf</ref> The CEC has held four symposia using this framework to evaluate the environmental impacts of NAFTA and has commissioned 47 papers on this subject. In keeping with the CEC’s overall strategy of transparency and public involvement, the CEC commissioned these papers from leading independent experts.<ref>www.cec.org/symposium</ref>

Overall, none of the initial hypotheses were confirmed. NAFTA did not inherently present a systemic threat to the North American environment, as was originally feared, but NAFTA-related environmental threats instead occurred in specific areas where government environmental policy, infrastructure, or mechanisms, were unprepared for the increasing scale of production under trade liberalization. In some cases, environmental policy was neglected in the wake of trade liberalization; in other cases, NAFTA’s measures for investment protection, such as Chapter 11, and measures against non-tariff trade barriers, threatened to discourage more vigorous environmental policy.<ref>http://www.ingentaconnect.com/content/beech/iapa/2006/00000024/00000004/art00002;jsessionid=1dy4980hq7bq0.alexandra?format=print</ref> The most serious overall increases in pollution due to NAFTA were found in the base metals sector, the Mexican petroleum sector, and the transportation equipment sector in the United States and Mexico, but not in Canada.<ref>http://www.cec.org/programs_projects/trade_environ_econ/pdfs/Reinert.pdf</ref>

===Agriculture===
From the earliest negotiation, [[agriculture]] was (and still remains) a controversial topic within NAFTA, as it has been with almost all [[free trade agreement]]s that have been signed within the [[WTO]] framework. Agriculture is the only section that was not negotiated trilaterally; instead, three separate agreements were signed between each pair of parties. The Canada-U.S. agreement contains significant restrictions and tariff quotas on agricultural products (mainly sugar, dairy, and poultry products), whereas the Mexico-U.S. pact allows for a wider [[liberalization]] within a framework of phase-out periods (It was the first [[North-South divide|North-South]] FTA on agriculture to be signed).

The overall effect of the Mexico-U.S. agricultural agreement is a matter of dispute. Mexico did not invest in the infrastructure necessary for competition, such as efficient railroads and highways, creating more difficult living conditions for the country's poor. Still, the causes of rural poverty cannot be directly attributed to NAFTA; in fact, Mexico's agricultural exports increased 9.4 percent annually between 1994 and 2001, while imports increased by only 6.9 percent a year during the same period.<ref>''Greening the Americas'', Carolyn L. Deere (editor). MIT Press, Cambridge, Massachusetts, USA</ref>

Production of [[corn]] in Mexico has increased since NAFTA's implementation. However, internal corn demand has increased beyond Mexico's sufficiency, and imports have become necessary, far beyond the quotas Mexico had originally negotiated.<ref>{{PDFlink|[http://americas.irc-online.org/pdf/reports/0402nafta.pdf NAFTA, Corn, and Mexico’s Agricultural Trade Liberalization]|152&nbsp;KB}} p. 4</ref> Zahniser & Coyle have also pointed out that corn prices in Mexico, adjusted for international prices, have drastically decreased, yet through a program of direct income transfer (a subsidy) expanded by former president [[Vicente Fox]], production has remained stable since 2000.<ref>[http://www.ers.usda.gov/publications/FDS/may04/fds04D01/ U.S.-Mexico Corn Trade During the NAFTA Era: New Twists to an Old Story] USDA Economic Research Service</ref>

The logical result of a lower commodity price is that more use of it is made downstream. Unfortunately, many of the same rural people who would have been likely to produce higher-margin value-added products in Mexico have instead [[emigration|emigrated]]. The rise in corn prices due to increased ethanol demand may improve the situation of corn farmers in Mexico.

In a study published in the August 2008 issue of the American Journal of Agricultural Economics, NAFTA has increased U.S. agricultural exports to Mexico and Canada even though most of this increase occurred a decade after its ratification. The study focused on the effects that gradual "phase-in" periods in regional trade agreements, including NAFTA, have on trade flows. Most of the increase in members’ agricultural trade, which was only recently brought under the purview of the World Trade Organization, was due to very high trade barriers before NAFTA or other regional trade agreements.<ref>[http://newswise.com/articles/view/541349/ Newswise: Free Trade Agreement Helped U.S. Farmers] Retrieved on June 12, 2008.</ref>

=== Mobility of persons ===
According to the [[Department of Homeland Security]] Yearbook of Immigration Statistics, during fiscal year 2006 (i.e., [[October 2005]] through
[[September 2006]]),
74,098 foreign professionals (64,633 Canadians and 9,247 Mexicans) were admitted into the United States for temporary employment under NAFTA (i.e., in the [[TN status]]). Additionally, 17,321 of their family members (13,136 Canadians, 2,904 Mexicans, as well as a number of third-country nationals married to Canadians and Mexicans) entered the U.S. in the treaty national's dependent (TD) status.<ref>[http://www.dhs.gov/ximgtn/statistics/publications/YrBk06NI.shtm DHS Yearbook 2006. Supplemental Table 1: Nonimmigrant Admissions (I-94 Only) by Class of Admission and Country of Citizenship: Fiscal Year 2006]</ref> Because DHS counts the number of the new [[Form I-94|I-94 arrival records]] filled at the border, and the TN-1 admission is valid for one year, the number of non-immigrants in TN status present in the U.S. at the end of the fiscal year is approximately equal to the number of admissions during the year. (A discrepancy may be caused by some TN entrants leaving the country or changing status before their one-year admission period expired, while other aliens admitted earlier may change their status ''to'' TN or TD, or extend earlier granted TN status).

Canadian authorities estimated that, as of [[December 1]], [[2006]], the total of 24,830 U.S. citizens and 15,219 Mexican citizens were present in Canada as "foreign workers". These numbers include both entrants under the NAFTA agreement and those who have entered under other provisions of the Canadian immigration law.<ref>[http://www.cic.gc.ca/english/resources/statistics/facts2006/temporary/04.asp Facts and Figures 2006
Immigration Overview: Temporary Residents] (Citizenship and Immigration Canada)</ref> New entries of foreign workers in 2006 were 16,841 (U.S. citizens) and 13,933 (Mexicans).<ref>[http://www.cic.gc.ca/english/resources/statistics/facts2006/temporary/03.asp Facts and Figures 2006 - Immigration Overview: Permanent and Temporary Residents<!-- Bot generated title -->]</ref>

==Criticism and controversies==
===Canadian disputes===

There is some concern in Canada over the provision that if something is sold even once as a [[commodity]], the government cannot stop its sale in the future.{{Fact|date=February 2008}} This applies to the water from Canada's lakes and rivers, fueling fears over the possible destruction of Canadian [[ecosystem]]s and water supply.

Other fears come from the effects NAFTA has had on Canadian lawmaking. In 1996, the gasoline additive [[Methylcyclopentadienyl Manganese Tricarbonyl|MMT]] was brought into Canada by an American company. At the time, the Canadian federal government banned the importation of the additive. The American company brought a claim under NAFTA Chapter 11 seeking US$201 million,<ref>{{PDFlink|[http://www.naftaclaims.com/Disputes/Canada/EthylCorp/EthylCorpNoticeOfArbitration.pdf Notice of Arbitration]|1.71&nbsp;MB}}, 'Ethyl Corporation vs. Government of Canada'</ref> and by Canadian provinces under the Agreement on Internal Trade ("AIT"). The American company argued that their additive had not been conclusively linked to any health dangers, and that the prohibition was damaging to their company. Following a finding that the ban was a violation of the AIT,<ref>{{PDFlink|[http://www.intrasec.mb.ca/en/dispute/11_22_2005/MMT.pdf Link is inactive, needs replaced with proper reference since January 2007]}}{{Dead link|date=December 2007}}</ref> the Canadian federal government repealed the ban and settled with the American company for US$13 million.<ref>[http://www.dfait-maeci.gc.ca/nafta-alena/nafta5_section06-en.asp Dispute Settlement]</ref> Studies by Health and Welfare Canada (now Health Canada) on the health effects of MMT in fuel found no significant health effects associated with exposure to these exhaust emissions. Other Canadian researchers and the U.S. Environmental Protection Agency disagree with Health Canada, and cite studies that include possible nerve damage.<ref>http://www.canadiandriver.com/articles/jk/040310.htm MMT: the controversy over this fuel additive continues </ref>

The United States and Canada had been [[U.S.-Canada softwood lumber dispute|arguing for years]] over the United States' decision to impose a 27 percent duty on Canadian [[softwood]] lumber imports, until new Canadian Prime Minister [[Stephen Harper]] compromised with the United States and reached a settlement on [[July 1]], [[2006]].<ref>[http://www.ustr.gov/Document_Library/Press_Releases/2006/July/US,_Canada_Reach_Final_Agreement_on_Lumber_Dispute.html U.S., Canada Reach Final Agreement on Lumber Dispute]</ref> The settlement has not yet been ratified by either country, in part due to domestic opposition in Canada.

Canada had filed numerous motions to have the duty eliminated and the collected duties returned to Canada.<ref>[http://www.dfait-maeci.gc.ca/eicb/softwood/background-en.asp softwood Lumber]</ref> After the United States lost an [[appeal]] from a NAFTA panel, it responded by saying "We are, of course, disappointed with the [NAFTA panel's] decision, but it will have no impact on the anti-dumping and countervailing duty orders." (Neena Moorjani, spokeswoman for U.S. Trade Representative Rob Portman)<ref>[http://www.ustr.gov/Document_Library/Spokesperson_Statements/Statement_from_USTR_Spokesperson_Neena_Moorjani_Regarding_the_NAFTA_Extraordinary_Challenge_Committee_decision_in_Softwood_Lumbe.html?ht= Statement from USTR Spokesperson Neena Moorjani Regarding the NAFTA Extraordinary Challenge Committee decision in Softwood Lumber]</ref> On [[July 21]], [[2006]], the [[U.S. Court of International Trade]] found that imposition of the duties was contrary to U.S. law.<ref>{{PDFlink|[http://www.cit.uscourts.gov/slip_op/Slip_op06/06-109.pdf 'Tembec, Inc vs. United States']|193&nbsp;KB}}</ref><ref>[http://www.ustr.gov/Document_Library/Press_Releases/2006/July/Statement_by_USTR_Spokesman_Stephen_Norton_Regarding_CIT_Lumber_Ruling.html?ht= Statement by USTR Spokesman Stephen Norton Regarding CIT Lumber Ruling]</ref>

====Canadian government challenged on change in Income trust taxation====

On [[October 30]], [[2007]], American citizens Marvin and Elaine Gottlieb filed a Notice of Intent to Submit a Claim to Arbitration under NAFTA. The couple claims thousands of U.S. investors lost a total of $5 billion dollars in the fall-out from the [[Income trust#The Conservatives propose new rules for income trusts|Conservative Government's]] decision last year to effectively tax income trusts in the energy sector out of existence.

Under the NAFTA, Canada is not allowed to target other NAFTA citizens when they impose new measures. Canadian Federal Finance Minister [[Jim Flaherty]] is on record that energy trusts were included because of their high U.S. ownership, while [[Real Estate Investment Trust]]s, owned mostly by Canadians, were excluded. NAFTA also stipulates that Canada must pay compensation for destroying investment by U.S. investors. The Government of Canada's 2006 [[Halloween]] tax changes for income trusts were designed to eliminate the income trust model for investment by U.S. citizens. The NAFTA says that U.S. investors are entitled to rely upon Canadian government promises. Harper repeatedly made a public promise that his Government would not tax [[trust (law)|trusts]], as had the previous Liberal Government. Canada's tax treaty with the United States also says that trust income will not be taxed at more than 15 percent.

The Gottliebs maintain a website for American and Mexican citizens interested in filing a NAFTA claim against the Government of Canada.<ref>[http://www.naftatrustclaims.com/ NAFTA Trust Claims]</ref>

===U.S. deindustrialization===
{{details|NAFTA's Impact on US Employment}}
An increase in domestic manufacturing output and a proportionally greater domestic investment in manufacturing does not necessarily mean an increase in domestic manufacturing jobs; it may simply reflect greater automation and higher productivity. Although the U.S. total civilian employment rate may have grown by almost 15 million in between 1993 and 2001, manufacturing jobs only increased by 476,000 in the same time period.<ref name="autogenerated1">{{cite web | url = http://www.bls.gov|title=U.S. Bureau of Labor Statistics}}</ref> Furthermore from 1994 to 2007, net manufacturing employment has declined by 3,654,000, and during this period several other free trade agreements have been concluded or expanded.<ref name="autogenerated1" />

===Impact on Mexican farmers===
In 2000, U.S. government subsidies to the corn sector totaled $10.1 billion, a figure ten times greater than the total Mexican agricultural budget that year.<ref>{{cite paper |author = Oxfam |title = Dumping without Borders: How U.S. Agricultural Policies Are Destroying the Livelihoods of Mexican Corn Farmers |publisher = Oxfam |date= 2003 |url = http://www.oxfam.org/en/files/pp030827_corn_dumping.pdf |format = PDF |accessdate = 2007-03-12}}</ref> Other studies reject NAFTA as the force responsible for depressing the incomes of poor corn farmers, citing the trend's existence more than a decade before NAFTA's existence, an increase in maize production after NAFTA went into effect in 1994, and the lack of a measurable impact on the price of Mexican corn due to subsidized corn coming into Mexico from the United States, though they agree that the abolition of U.S. agricultural subsidies would benefit Mexican farmers.<ref>{{cite journal |last = Fiess |first = Norbert |coauthors = Daniel Lederman |title = Mexican Corn: The Effects of NAFTA |journal = Trade Note |volume = 18 |publisher = The World Bank Group |date= 2004-11-24 |url = http://wbln0018.worldbank.org/LAC/LACInfoClient.nsf/d29684951174975c85256735007fef12/026efe204f018bc885256f40006d1901/$FILE/TradeNote18.pdf |accessdate = 2007-03-12 }}</ref>

===Chapter 11===
Another contentious issue is the impact of the investment obligations contained in Chapter 11 of the NAFTA.<ref>[http://www.sice.oas.org/trade/NAFTA/chap-111.asp NAFTA, Chapter 11]</ref> Chapter 11 allows corporations or individuals to sue Mexico, Canada or the United States for compensation when actions taken by those governments (or by those for whom they are responsible at international law, such as provincial, state, or municipal governments) have adversely affected their investments.

This chapter has been invoked in cases where governments have passed laws or regulations with intent to protect their constituents and their resident businesses' profits. Language in the chapter defining its scope states that it cannot be used to "prevent a Party from providing a service or performing a function such as law enforcement, correctional services, income security or insurance, [[social security]] or [[insurance]], social welfare, [[public education]], public training, health, and child care, in a manner that is not inconsistent with this Chapter."<ref>http://www.gutenberg.org/dirs/etext93/naftchap.txt</ref>

This chapter has been criticized by groups in the U.S.,<ref>[http://www.citizen.org/trade/nafta/ 'North American Free Trade Agreement (NAFTA)', '''Public Citizen''']</ref> Mexico,<ref>{{Cite web| url=http://www.developmentgap.org/rmalenvi.html| archiveurl=http://web.petabox.bibalex.org/web/20060521125008/http://developmentgap.org/rmalenvi.html| archivedate=2006-05-21| title=NAFTA and the Mexican Environment| author=Red Mexicana de Accion Frente al Libre Comercio }}</ref> and Canada<ref>[http://www.canadians.org/ The Council of Canadians]</ref> for a variety of reasons, including not taking into account important social and environmental<ref>[http://www.cec.org/pubs_docs/documents/index.cfm?varlan=English&ID=1829 The NAFTA environmental agreement: The Intersection of Trade and the Environment]</ref> considerations. In Canada, several groups, including the Council of Canadians, challenged the constitutionality of Chapter 11. They lost at the trial level,<ref>[http://www.pej.org/html/modules.php?op=modload&name=News&file=article&sid=3064 Judge Rebuffs Challenge to NAFTA'S Chapter 11 Investor Claims Process]</ref> and have subsequently appealed.

[[Methanex]], a Canadian corporation, filed a [[US$]]970 million suit against the United States, claiming that a [[California]] ban on [[MTBE]], a substance that had found its way into many wells in the state, was hurtful to the corporation's sales of [[methanol]]. However, the claim was rejected, and the company was ordered to pay US$3 million to the U.S. government in costs.<ref>{{PDFlink|[http://naftaclaims.com/Disputes/USA/Methanex/Methanex_Final_Award.pdf Arbitration reward between Methanex Corporation and United States of America]|1.45&nbsp;MB}}</ref>

In another case, [[Metalclad]], an American corporation, was awarded US$15.6 million from Mexico after a Mexican municipality refused a construction permit for the [[hazardous waste]] landfill it intended to construct in [[Guadalcazar]], [[San Luis Potosi]]. The construction had already been approved by the federal government with various environmental requirements imposed (see paragraph 48 of the tribunal decision). The NAFTA panel found that the municipality did not have the authority to ban construction on the basis of the alleged environmental concerns.<ref>{{PDFlink|[http://naftaclaims.com/Disputes/Mexico/Metalclad/MetalcladFinalAward.pdf Arbitration reward between Metalclad Corporation and The United Mexican States]|120&nbsp;KB}}</ref>

===Chapter 19===
Also contentious is NAFTA's Chapter 19, which subjects [[antidumping]] and [[countervailing duty]] (AD/CVD) determinations with binational panel review instead of, or in addition to, conventional judicial review. For example, in the United States, review of agency decisions imposing antidumping and countervailing duties are normally heard before the U.S. [[Court of International Trade]], an [[Article III court]]. NAFTA parties, however, have the option of appealing the decisions to binational panels composed of five citizens from the two relevant NAFTA countries. The panelists are generally lawyers experienced in international trade law. Since the NAFTA does not include substantive provisions concerning AD/CVD, the panel is charged with determining whether final agency determinations involving AD/CVD conform with the country's domestic law. Chapter 19 can be considered as somewhat of an anomaly in international dispute settlement since it does not apply international law, but requires a panel composed of individuals from many countries to reexamine the application of one country's domestic law.

A Chapter 19 panel is expected to examine whether the agency's determination is supported by "substantial evidence." This standard assumes significant deference to the domestic agency.

Some of the most controversial trade disputes in recent years, such as the [[U.S.-Canada softwood lumber dispute]], have been litigated before Chapter 19 panels.

Decisions by Chapter 19 panels can be challenged before a NAFTA extraordinary challenge committee. However, an extraordinary challenge committee does not function as an ordinary appeal. Under the NAFTA, it will only vacate or remand a decision if the decision involves a significant and material error that threatens the integrity of the NAFTA dispute settlement system. {{As of|January 2006}}, no NAFTA party has successfully challenged a Chapter 19 panel's decision before an extraordinary challenge committee.

===Chapter 20===
Chapter 20 provides a procedure for the interstate resolution of disputes over the application and interpretation of the NAFTA. It was modeled after Chapter 18 of the Canada-United States Free Trade Agreement.<ref>Gantz, D.A. 1999. “Dispute Settlement Under the NAFTA and the WTO:Choice of Forum Opportunities and Risks for the NAFTA Parties.” American University International Law Review 14(4):1025–1106.
</ref>

===Chapter 14===
"This chapter dealing with Financial Services provides for the same procedure as Chapter 20, except that the members of the panel shall be selected from a roster of fifteen persons who "have expertise in financial services law or practice..." The roster has never been made public and no dispute has yet occurred under this chapter."<ref> de Mestral, A. 2005. “NAFTA Dispute Settlement: Creative Experiment or Confusion.” Unpublished manuscript, McGill University, Montreal, QC .</ref>

==Public opinion==
Public opinion toward NAFTA in the United States, Canada, and Mexico is mixed. A July 2004 survey conducted by [[CIDE]] and COMEXI in Mexico showed that 64 percent of the Mexican public favored NAFTA. The [[Program on International Policy Attitudes]] reported in a January 2004 poll that 47 percent of Americans thought that NAFTA has been good for the United States, while 39 percent thought it had been bad for the country.<ref>[http://www.americanprogress.org/issues/2007/01/wtprw.html What the Public Really Wants on Globalization and Trade]</ref>
A recent Rasmussen report shows that only 16% of likely Democratic voters in the 2008 presidential election support NAFTA, while 53% disapprove of the trade agreement.<ref>[http://news.yahoo.com/s/rasmussen/20080226/pl_rasmussen/ohiodemrace20080226 Democrats on NAFTA]</ref>

A Canadian poll conducted in June 2003 by [[Ipsos Reid]] found that 70 percent of Canadians supported NAFTA, while only 26 percent were opposed. However, a May 2004 Ipsos poll found that "Six in ten Canadians (62 percent) disagree that Canada should sign a trade agreement that would open Canada’s public services to competition from foreign companies" and "A further six in ten (60 percent) disagree that government should sign deals that would allow corporations to directly sue the Government of Canada if our public policies impair their ability to make profits".<ref>[http://www.ipsos-na.com/news/pressrelease.cfm?id=2224 Canadians’ Views On Trade Agreements:<!-- Bot generated title -->]</ref>

Despite their support for NAFTA, the polls in Canada and Mexico have tended to show that citizens see their own country as the loser in NAFTA, and to see the United States as the winner. The U.S. public has viewed Mexico as the winner and has been narrowly divided about whether the United States is a winner or loser in NAFTA.<ref name="Poll">[http://www.worldpublicopinion.org/pipa/articles/brlatinamericara/161.php?nid=&id=&pnt=161&lb=brla In Mexico, U.S. and Canada, Public Support for NAFTA Surprisingly Strong, Given each Country Sees Grass as Greener on the Other Side]</ref>

==Travel and migration==
===United States and Canada===
{{main|Canada – United States border}}

Border restrictions were largely unaffected by the 1988 Free Trade Agreement, and NAFTA gave mobility rights to only listed professionals<ref>[http://www.sice.oas.org/trade/nafta/chap-162.asp#Ap1603.D.1 Appendix 1603.D.1 of NAFTA]</ref> (admittable to the U.S. under the [[TN status]], or to Canada as "business people covered by NAFTA"<ref>[http://www.cic.gc.ca/english/work/special-business.asp Working temporarily in Canada: Special categories—Business people]</ref>).
Also, the border has been tightened in response to concerns about [[illegal drug|drugs]] and then [[terrorism]]. This freedom of mobility has had important qualifications. It can be suspended or terminated by either government at will.

===The United States and Mexico===
{{main|United States–Mexico border}}

In 2000, [[President of Mexico|Mexican President]] [[Vicente Fox]] advocated the idea of free flow of people across the U.S.-Mexico border as a second phase of NAFTA, which would be completed in ten years. However, negotiations ceased after the [[9/11]] attacks, when debate in the [[United States]] shifted towards an [[immigration policy]] with security as its main goal.

Developments in early 2006 brought the Mexican-U.S. border and [[United States immigration debate]] to the center stage in American politics. The [[Secure Fence Act of 2006]] provided for 700 miles of high security fence, to be built in regions of the border subject to high rates of illegal crossings. To this date only seven miles of fence have been built,{{Fact|date=March 2008}} with the U.S. Congress wavering on its decision. The [[Comprehensive Immigration Reform Act of 2007]] would have granted [[illegal immigrant]]s already in the country a way forward to stay and gain citizenship. It would also have provided up to 200,000 placements per year for guest workers. On [[June 28]], [[2007]], the bill failed [[cloture]] in the Senate, largely due to public outcry, and no further action was taken.

The [[open skies]] policy is intended to be applied by both of the governments once the [[Mexican]] air-transportation industry has been stabilized and [[Mexico]]'s largest airlines [[AeroMexico]] and [[Mexicana]] consider themselves able to compete with airlines the size of [[American Airlines]], [[Continental Airlines]] and [[United Airlines]].

== See also ==
* [[Canada-Mexico relations]]
* [[Canada-United States relations]]
* [[Independent Task Force on North America]]
* [[North American Competitiveness Council]]
* [[North American Currency Union]] (Amero)
* [[North American Forum on Integration]]
* [[North American SuperCorridor Coalition]]
* [[North American Union]]
* [[United States-Mexico relations]]

{{Free Trade Associations of the United States|state=uncollapsed}}
{{Trilateral relations of Canada, Mexico, and United States}}

==References==
{{Reflist|2}}

==External links==
* {{gutenberg|no=89|name=North American Free Trade Agreement, 1992 Oct. 7}}
* [http://www.tradeagreements.gov/ TradeAgreements.gov:] an interagency effort by the United States Government to provide the public with the latest information on America's trade agreements
* [http://www.ustr.gov/Trade_Agreements/Regional/NAFTA/Section_Index.html Office of the U.S. Trade Representative]
* [http://www.freetrade.org/pubs/FTBs/FTB-001.html NAFTA at 10: An Economic and Foreign Policy Success] by [[Daniel Griswold]] ([[December 17]], [[2002]])
* Studies of the effects of NAFTA after 10 years have been prepared by both the U.S. Government (see [http://www.ita.doc.gov/td/industry/otea/nafta/nafta-index.html NAFTA 10 Years Later]) and the Canadian government (see [http://www.international.gc.ca/eet/research/nafta-en.asp NAFTA @10])
* The Organization for Economic Co-operation and Development, or OECD, publishes annual economic statistics. The results of data mining research concerning NAFTA have been published on [http://centrerion.blogspot.com/2006/02/impact-of-nafta-on-canada-introduction.html Centrerion Canadian Politics' NAFTA pages], the data having been mined from OECD sources.
* [http://www.nadb.org/ North American Development Bank]
* [http://www.commondreams.org/views06/0425-30.htm Immigration Flood Unleashed by NAFTA's Disastrous Impact on Mexican Economy]
* {{PDFlink|[http://www.law.nyu.edu/journals/envtllaw/issues/vol11/1/been.pdf Vicki Been, Does an International "Regulatory Takings" Doctrine Make Sense?, 11 New York University Environmental Law Journal (2003)]|131&nbsp;KB}} (arguing that NAFTA Chapter 11 has more expansive compensation criteria than U.S. takings law, which has the potential to impact and threaten domestic environmental regulation and impact federalism issues)
* David Bacon. ''The Children of NAFTA: Labor wars on the U.S./Mexico Border''. Berkeley: University of California Press. 2004. ISBN 0-520-23778-1.
* [http://dbacon.igc.org/FarmWork/03knife.html David Bacon, "A Knife in the Heart]
* {{PDFlink|[http://courses.washington.edu/idcppol/NAFTAat10.pdf ''NAFTA at Ten: The Recount'' (Center for Economic and Policy Research)]}}
* {{PDFlink|[http://are.berkeley.edu/courses/EEP131/fall2006/NotableStudent04/RegulatoryTakingGrab.pdf Denise Grab, Expropriation clauses: a natural extension of domestic takings law or much more?]|42.5&nbsp;KB}}
* [http://www.citizen.org/trade/nafta/ Public Citizen's Report on NAFTA]
* [http://www.nafta-sec-alena.org/ NAFTA Secretariat website]
* [http://www.thebta.org/ Border Trade Alliance]
* [http://www.naftaclaims.com/ Details of investor-state cases under NAFTA]
* [http://www.dollarsandsense.org/archives/2003/0103dollar.html How Has NAFTA Affected Trade and Employment?] from [[Dollars & Sense]] magazine, January/February 2003
* [http://www.naftatrustclaims.com/ NAFTA Trust Claims]
* [http://www.dollarsandsense.org/archives/2008/0108sciacchitano.html From NAFTA to the SPP] from [[Dollars & Sense]] magazine, January/February 2008
* [http://www.revistaexo.com/revista/03/0301.html NAFTA and World's hegemony]

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Revision as of 18:43, 24 September 2008


Emblem of the North American Free Trade Agreement
Emblem
Location of the North American Free Trade Agreement
SecretariatsMexico City, Ottawa and Washington, D.C.
Official languagesEnglish, French and Spanish
Membership Canada
 Mexico
 United States
Establishment
• Formation
1 January 1994
Area
• Total
21,783,850 km2 (8,410,790 sq mi) (1st)
• Water (%)
7.4
Population
• 2008 estimate
445,335,091 (3rd)
• Density
20.4/km2 (52.8/sq mi) (195th)
GDP (PPP)2007 (IMF) estimate
• Total
$15,857 billion (1st)
• Per capita
$35,491 (14th)
GDP (nominal)2007 (IMF) estimate
• Total
$15,723 billion (2nd)
• Per capita
$35,564 (18th)

The North American Free Trade Agreement (Spanish: Tratado de Libre Comercio de América del Norte [TLCAN], French: Accord de libre-échange nord-américain [ALENA]) is a trilateral trade bloc in North America created by the governments of the United States, Canada, and Mexico. The North American Free Trade Agreement (NAFTA) has two supplements, the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labo(u)r Cooperation (NAALC). The agreements came into effect on January 1, 1994. In terms of combined purchasing power parity GDP of its members, as of 2020 the trade bloc is the largest in the world and second largest by nominal GDP comparison.

Supplemental agreements

North American Agreement on Environmental Cooperation

The North American Agreement on Environmental Cooperation (NAAEC) was a response to environmentalists' concerns that the United States would lower its standards if the three countries did not achieve consistent environmental regulation. The NAAEC only obligates parties to enforce their own environmental laws. The NAAEC, in an endeavour to be more than a set of environmental regulations, established the North American Commission for Environmental Cooperation, a mechanism for addressing trade and environmental issues, the North American Development Bank (NADBank) for assisting and financing investments in pollution reduction, and the Border Environmental Cooperation Commission (BECC). The NADBank and the BECC have provided economic benefits to Mexico by financing 36 projects, mostly in the water sector.[1]

North American Agreement on Labo(u)r Cooperation

The North American Agreement on Labo(u)r Cooperation (NAALC) supplements NAFTA and endeavors to create a foundation for cooperation among the three countries for the resolution of labor problems, as well as to promote greater cooperation among trade unions and social organizations in order to fight for improved labor conditions.

Further integration

While different groups advocate for a further integration into a North American Community, sensitive issues have hindered that process. The three countries have pursued different trade policies with non-members (for example, Mexico has signed FTAs with more than 40 countries in 12 agreements), making the possibility of creating a customs union difficult to accomplish. Former President Vicente Fox of Mexico had promoted the idea of enhancing NAFTA (into what he labeled "NAFTA-Plus", or possibly a North American Community), but after the September 11, 2001 attacks, priorities in the United States changed. The Security and Prosperity Partnership of North America was signed, instead, as a separate and unrelated agreement.

Given the scope of the agreement, which includes very sensitive issues in trade talks such as agriculture liberalization and environment regulation, few countries have shown interest in joining NAFTA. Instead, some countries, like Chile, preferred to negotiate three separate bilateral agreements with the three current NAFTA members, with different restrictions to liberalization of their industries and the regulation of environment protection. Jamaica and Trinidad and Tobago also showed a similar interest.[2][3][4]

In an interview with Larry King on October 8, 2007, Fox described any plans for a North American single currency as a "long term, very long term" proposal. He also spoke of he and U.S. President George W. Bush's support for the Free Trade Area of the Americas as a "first step" toward "a new vision" for the Americas, "like we are trying to do with NAFTA", but then said that Venezuelan President Hugo Chávez had decided to "destroy the idea".[5]

History of the implementation

File:Bill Clinton signing Nafta.gif
President Bill Clinton signing NAFTA into law, November 1993

NAFTA was initially promoted by politicians in the United States and Canada supportive of free trade, led by Canadian Prime Minister Brian Mulroney, U.S. President George H. W. Bush, Mexican President Carlos Salinas de Gortari. The agreement was pursued by business interests in all three countries [6] and opposed by labor, environmental, other business interests, in all three countries. [7][8][9][10][11] The three countries signed NAFTA in December 1992, subject to ratification by the legislatures of the three countries.

In the United States, NAFTA was able to secure passage after Bill Clinton made its passage a major legislative priority in 1993. Clinton's United States Trade Representative, Mickey Kantor, was a strong advocate of the treaty. Since the agreement had been signed by Bush under his fast-track prerogative, Clinton did not alter the original agreement, but complemented it with the aforementioned NAAEC and NAALC. After intense political debate and the negotiation of these side agreements, the U.S. House of Representatives passed NAFTA on November 17, 1993, by 234-200 vote (132 Republicans and 102 Democrats voting in favor; 43 Republicans, 156 Democrats, and 1 independent against),[12] and the U.S. Senate passed it on the last day of its 1993 session, November 20, 1993, by 61-38 vote (34 Republicans and 27 Democrats voting in favor; 10 Republicans and 28 Democrats against, with 1 Democrat opponent not voting -- Sen. Byron Dorgan (D-ND), an ardent foe of NAFTA, missed the vote because of an illness in his family).[13]

Effects

The effects of NAFTA, both positive and negative, have been quantified by several economists, whose findings have been reported in publications such as the World Bank's Lessons from NAFTA for Latin America and the Caribbean,[14] NAFTA's Impact on North America,[15] and NAFTA Revisited by the Institute for International Economics.[16] Some argue that NAFTA has been positive for Mexico, which has seen its poverty rates fall and real income rise, even after accounting for the 1994–1995 economic crisis.[17] Others argue that NAFTA has been beneficial to business owners and elites in all three countries, but has had negative impacts on farmers in Mexico who saw food prices fall based on cheap imports from U.S. agribusiness, and negative impacts on U.S. workers in manufacturing and assembly industries who lost jobs. Critics also argue that NAFTA has contributed to the rising levels of inequality in both the U.S. and Mexico. Some economists believe that NAFTA has not been enough (or worked fast enough) to produce an economic convergence,[18] nor to substantially reduce poverty rates. Some have suggested that in order to fully benefit from the agreement, Mexico must invest more in education and promote innovation in infrastructure and agriculture.

Trade

According to Hufbauer (2005), overall, NAFTA has not caused trade diversion, aside from a few select industries such as textiles and apparel, in which rules of origin negotiated in the agreement were specifically designed to make U.S. firms prefer Mexican manufacturers. The World Bank also showed that the collected NAFTA imports' percentage growth was accompanied by an almost similar increase of non-NAFTA exports.

Industry

Maquiladoras (Mexican factories which take in imported raw materials and produce goods for export) have become the landmark of trade in Mexico. These are plants that moved to this region from the United States, hence the debate over the loss of American jobs. Hufbauer's (2005) book shows that income in the maquiladora sector has increased 15.5% since the implementation of NAFTA in 1994. Other sectors now benefit from the free trade agreement, and the share of exports from non-border states has increased in the last five years while the share of exports from maquiladora-border states has decreased. This phenomenon has allowed for the rapid growth of non-border metropolitan areas, such as Toluca, León and Puebla; all three larger in population than Tijuana, Ciudad Juárez, and Reynosa. The main non-maquiladora industry that has benefited from NAFTA is the automobile industry.

Environment

Securing US congressional approval for NAFTA would have been impossible without addressing public concerns about NAFTA’s environmental impact. The Clinton Administration negotiated a side agreement on the environment with Canada and Mexico, the North American Agreement on Environmental Cooperation, NAAEC, which led to the creation of the Commission for Environmental Cooperation in 1994. To alleviate concerns that NAFTA, the first regional trade agreement between a developing country and two developed countries, would have negative environmental impacts, the CEC was given a mandate to conduct ongoing ex post environmental assessment of NAFTA.[19]

In response to this mandate, the CEC created a framework for conducting environmental analysis of NAFTA, one of the first ex post frameworks for the environmental assessment of trade liberalization. The framework was designed to produce a focused and systematic body of evidence with respect to the initial hypotheses about NAFTA and the environment, such as the concern that NAFTA would create a “race to the bottom” in environmental regulation among the three countries, or the hope that NAFTA would pressure governments to increase their environmental protection mechanisms.[20] The CEC has held four symposia using this framework to evaluate the environmental impacts of NAFTA and has commissioned 47 papers on this subject. In keeping with the CEC’s overall strategy of transparency and public involvement, the CEC commissioned these papers from leading independent experts.[21]

Overall, none of the initial hypotheses were confirmed. NAFTA did not inherently present a systemic threat to the North American environment, as was originally feared, but NAFTA-related environmental threats instead occurred in specific areas where government environmental policy, infrastructure, or mechanisms, were unprepared for the increasing scale of production under trade liberalization. In some cases, environmental policy was neglected in the wake of trade liberalization; in other cases, NAFTA’s measures for investment protection, such as Chapter 11, and measures against non-tariff trade barriers, threatened to discourage more vigorous environmental policy.[22] The most serious overall increases in pollution due to NAFTA were found in the base metals sector, the Mexican petroleum sector, and the transportation equipment sector in the United States and Mexico, but not in Canada.[23]

Agriculture

From the earliest negotiation, agriculture was (and still remains) a controversial topic within NAFTA, as it has been with almost all free trade agreements that have been signed within the WTO framework. Agriculture is the only section that was not negotiated trilaterally; instead, three separate agreements were signed between each pair of parties. The Canada-U.S. agreement contains significant restrictions and tariff quotas on agricultural products (mainly sugar, dairy, and poultry products), whereas the Mexico-U.S. pact allows for a wider liberalization within a framework of phase-out periods (It was the first North-South FTA on agriculture to be signed).

The overall effect of the Mexico-U.S. agricultural agreement is a matter of dispute. Mexico did not invest in the infrastructure necessary for competition, such as efficient railroads and highways, creating more difficult living conditions for the country's poor. Still, the causes of rural poverty cannot be directly attributed to NAFTA; in fact, Mexico's agricultural exports increased 9.4 percent annually between 1994 and 2001, while imports increased by only 6.9 percent a year during the same period.[24]

Production of corn in Mexico has increased since NAFTA's implementation. However, internal corn demand has increased beyond Mexico's sufficiency, and imports have become necessary, far beyond the quotas Mexico had originally negotiated.[25] Zahniser & Coyle have also pointed out that corn prices in Mexico, adjusted for international prices, have drastically decreased, yet through a program of direct income transfer (a subsidy) expanded by former president Vicente Fox, production has remained stable since 2000.[26]

The logical result of a lower commodity price is that more use of it is made downstream. Unfortunately, many of the same rural people who would have been likely to produce higher-margin value-added products in Mexico have instead emigrated. The rise in corn prices due to increased ethanol demand may improve the situation of corn farmers in Mexico.

In a study published in the August 2008 issue of the American Journal of Agricultural Economics, NAFTA has increased U.S. agricultural exports to Mexico and Canada even though most of this increase occurred a decade after its ratification. The study focused on the effects that gradual "phase-in" periods in regional trade agreements, including NAFTA, have on trade flows. Most of the increase in members’ agricultural trade, which was only recently brought under the purview of the World Trade Organization, was due to very high trade barriers before NAFTA or other regional trade agreements.[27]

Mobility of persons

According to the Department of Homeland Security Yearbook of Immigration Statistics, during fiscal year 2006 (i.e., October 2005 through September 2006), 74,098 foreign professionals (64,633 Canadians and 9,247 Mexicans) were admitted into the United States for temporary employment under NAFTA (i.e., in the TN status). Additionally, 17,321 of their family members (13,136 Canadians, 2,904 Mexicans, as well as a number of third-country nationals married to Canadians and Mexicans) entered the U.S. in the treaty national's dependent (TD) status.[28] Because DHS counts the number of the new I-94 arrival records filled at the border, and the TN-1 admission is valid for one year, the number of non-immigrants in TN status present in the U.S. at the end of the fiscal year is approximately equal to the number of admissions during the year. (A discrepancy may be caused by some TN entrants leaving the country or changing status before their one-year admission period expired, while other aliens admitted earlier may change their status to TN or TD, or extend earlier granted TN status).

Canadian authorities estimated that, as of December 1, 2006, the total of 24,830 U.S. citizens and 15,219 Mexican citizens were present in Canada as "foreign workers". These numbers include both entrants under the NAFTA agreement and those who have entered under other provisions of the Canadian immigration law.[29] New entries of foreign workers in 2006 were 16,841 (U.S. citizens) and 13,933 (Mexicans).[30]

Criticism and controversies

Canadian disputes

There is some concern in Canada over the provision that if something is sold even once as a commodity, the government cannot stop its sale in the future.[citation needed] This applies to the water from Canada's lakes and rivers, fueling fears over the possible destruction of Canadian ecosystems and water supply.

Other fears come from the effects NAFTA has had on Canadian lawmaking. In 1996, the gasoline additive MMT was brought into Canada by an American company. At the time, the Canadian federal government banned the importation of the additive. The American company brought a claim under NAFTA Chapter 11 seeking US$201 million,[31] and by Canadian provinces under the Agreement on Internal Trade ("AIT"). The American company argued that their additive had not been conclusively linked to any health dangers, and that the prohibition was damaging to their company. Following a finding that the ban was a violation of the AIT,[32] the Canadian federal government repealed the ban and settled with the American company for US$13 million.[33] Studies by Health and Welfare Canada (now Health Canada) on the health effects of MMT in fuel found no significant health effects associated with exposure to these exhaust emissions. Other Canadian researchers and the U.S. Environmental Protection Agency disagree with Health Canada, and cite studies that include possible nerve damage.[34]

The United States and Canada had been arguing for years over the United States' decision to impose a 27 percent duty on Canadian softwood lumber imports, until new Canadian Prime Minister Stephen Harper compromised with the United States and reached a settlement on July 1, 2006.[35] The settlement has not yet been ratified by either country, in part due to domestic opposition in Canada.

Canada had filed numerous motions to have the duty eliminated and the collected duties returned to Canada.[36] After the United States lost an appeal from a NAFTA panel, it responded by saying "We are, of course, disappointed with the [NAFTA panel's] decision, but it will have no impact on the anti-dumping and countervailing duty orders." (Neena Moorjani, spokeswoman for U.S. Trade Representative Rob Portman)[37] On July 21, 2006, the U.S. Court of International Trade found that imposition of the duties was contrary to U.S. law.[38][39]

Canadian government challenged on change in Income trust taxation

On October 30, 2007, American citizens Marvin and Elaine Gottlieb filed a Notice of Intent to Submit a Claim to Arbitration under NAFTA. The couple claims thousands of U.S. investors lost a total of $5 billion dollars in the fall-out from the Conservative Government's decision last year to effectively tax income trusts in the energy sector out of existence.

Under the NAFTA, Canada is not allowed to target other NAFTA citizens when they impose new measures. Canadian Federal Finance Minister Jim Flaherty is on record that energy trusts were included because of their high U.S. ownership, while Real Estate Investment Trusts, owned mostly by Canadians, were excluded. NAFTA also stipulates that Canada must pay compensation for destroying investment by U.S. investors. The Government of Canada's 2006 Halloween tax changes for income trusts were designed to eliminate the income trust model for investment by U.S. citizens. The NAFTA says that U.S. investors are entitled to rely upon Canadian government promises. Harper repeatedly made a public promise that his Government would not tax trusts, as had the previous Liberal Government. Canada's tax treaty with the United States also says that trust income will not be taxed at more than 15 percent.

The Gottliebs maintain a website for American and Mexican citizens interested in filing a NAFTA claim against the Government of Canada.[40]

U.S. deindustrialization

An increase in domestic manufacturing output and a proportionally greater domestic investment in manufacturing does not necessarily mean an increase in domestic manufacturing jobs; it may simply reflect greater automation and higher productivity. Although the U.S. total civilian employment rate may have grown by almost 15 million in between 1993 and 2001, manufacturing jobs only increased by 476,000 in the same time period.[41] Furthermore from 1994 to 2007, net manufacturing employment has declined by 3,654,000, and during this period several other free trade agreements have been concluded or expanded.[41]

Impact on Mexican farmers

In 2000, U.S. government subsidies to the corn sector totaled $10.1 billion, a figure ten times greater than the total Mexican agricultural budget that year.[42] Other studies reject NAFTA as the force responsible for depressing the incomes of poor corn farmers, citing the trend's existence more than a decade before NAFTA's existence, an increase in maize production after NAFTA went into effect in 1994, and the lack of a measurable impact on the price of Mexican corn due to subsidized corn coming into Mexico from the United States, though they agree that the abolition of U.S. agricultural subsidies would benefit Mexican farmers.[43]

Chapter 11

Another contentious issue is the impact of the investment obligations contained in Chapter 11 of the NAFTA.[44] Chapter 11 allows corporations or individuals to sue Mexico, Canada or the United States for compensation when actions taken by those governments (or by those for whom they are responsible at international law, such as provincial, state, or municipal governments) have adversely affected their investments.

This chapter has been invoked in cases where governments have passed laws or regulations with intent to protect their constituents and their resident businesses' profits. Language in the chapter defining its scope states that it cannot be used to "prevent a Party from providing a service or performing a function such as law enforcement, correctional services, income security or insurance, social security or insurance, social welfare, public education, public training, health, and child care, in a manner that is not inconsistent with this Chapter."[45]

This chapter has been criticized by groups in the U.S.,[46] Mexico,[47] and Canada[48] for a variety of reasons, including not taking into account important social and environmental[49] considerations. In Canada, several groups, including the Council of Canadians, challenged the constitutionality of Chapter 11. They lost at the trial level,[50] and have subsequently appealed.

Methanex, a Canadian corporation, filed a US$970 million suit against the United States, claiming that a California ban on MTBE, a substance that had found its way into many wells in the state, was hurtful to the corporation's sales of methanol. However, the claim was rejected, and the company was ordered to pay US$3 million to the U.S. government in costs.[51]

In another case, Metalclad, an American corporation, was awarded US$15.6 million from Mexico after a Mexican municipality refused a construction permit for the hazardous waste landfill it intended to construct in Guadalcazar, San Luis Potosi. The construction had already been approved by the federal government with various environmental requirements imposed (see paragraph 48 of the tribunal decision). The NAFTA panel found that the municipality did not have the authority to ban construction on the basis of the alleged environmental concerns.[52]

Chapter 19

Also contentious is NAFTA's Chapter 19, which subjects antidumping and countervailing duty (AD/CVD) determinations with binational panel review instead of, or in addition to, conventional judicial review. For example, in the United States, review of agency decisions imposing antidumping and countervailing duties are normally heard before the U.S. Court of International Trade, an Article III court. NAFTA parties, however, have the option of appealing the decisions to binational panels composed of five citizens from the two relevant NAFTA countries. The panelists are generally lawyers experienced in international trade law. Since the NAFTA does not include substantive provisions concerning AD/CVD, the panel is charged with determining whether final agency determinations involving AD/CVD conform with the country's domestic law. Chapter 19 can be considered as somewhat of an anomaly in international dispute settlement since it does not apply international law, but requires a panel composed of individuals from many countries to reexamine the application of one country's domestic law.

A Chapter 19 panel is expected to examine whether the agency's determination is supported by "substantial evidence." This standard assumes significant deference to the domestic agency.

Some of the most controversial trade disputes in recent years, such as the U.S.-Canada softwood lumber dispute, have been litigated before Chapter 19 panels.

Decisions by Chapter 19 panels can be challenged before a NAFTA extraordinary challenge committee. However, an extraordinary challenge committee does not function as an ordinary appeal. Under the NAFTA, it will only vacate or remand a decision if the decision involves a significant and material error that threatens the integrity of the NAFTA dispute settlement system. As of January 2006, no NAFTA party has successfully challenged a Chapter 19 panel's decision before an extraordinary challenge committee.

Chapter 20

Chapter 20 provides a procedure for the interstate resolution of disputes over the application and interpretation of the NAFTA. It was modeled after Chapter 18 of the Canada-United States Free Trade Agreement.[53]

Chapter 14

"This chapter dealing with Financial Services provides for the same procedure as Chapter 20, except that the members of the panel shall be selected from a roster of fifteen persons who "have expertise in financial services law or practice..." The roster has never been made public and no dispute has yet occurred under this chapter."[54]

Public opinion

Public opinion toward NAFTA in the United States, Canada, and Mexico is mixed. A July 2004 survey conducted by CIDE and COMEXI in Mexico showed that 64 percent of the Mexican public favored NAFTA. The Program on International Policy Attitudes reported in a January 2004 poll that 47 percent of Americans thought that NAFTA has been good for the United States, while 39 percent thought it had been bad for the country.[55] A recent Rasmussen report shows that only 16% of likely Democratic voters in the 2008 presidential election support NAFTA, while 53% disapprove of the trade agreement.[56]

A Canadian poll conducted in June 2003 by Ipsos Reid found that 70 percent of Canadians supported NAFTA, while only 26 percent were opposed. However, a May 2004 Ipsos poll found that "Six in ten Canadians (62 percent) disagree that Canada should sign a trade agreement that would open Canada’s public services to competition from foreign companies" and "A further six in ten (60 percent) disagree that government should sign deals that would allow corporations to directly sue the Government of Canada if our public policies impair their ability to make profits".[57]

Despite their support for NAFTA, the polls in Canada and Mexico have tended to show that citizens see their own country as the loser in NAFTA, and to see the United States as the winner. The U.S. public has viewed Mexico as the winner and has been narrowly divided about whether the United States is a winner or loser in NAFTA.[58]

Travel and migration

United States and Canada

Border restrictions were largely unaffected by the 1988 Free Trade Agreement, and NAFTA gave mobility rights to only listed professionals[59] (admittable to the U.S. under the TN status, or to Canada as "business people covered by NAFTA"[60]). Also, the border has been tightened in response to concerns about drugs and then terrorism. This freedom of mobility has had important qualifications. It can be suspended or terminated by either government at will.

The United States and Mexico

In 2000, Mexican President Vicente Fox advocated the idea of free flow of people across the U.S.-Mexico border as a second phase of NAFTA, which would be completed in ten years. However, negotiations ceased after the 9/11 attacks, when debate in the United States shifted towards an immigration policy with security as its main goal.

Developments in early 2006 brought the Mexican-U.S. border and United States immigration debate to the center stage in American politics. The Secure Fence Act of 2006 provided for 700 miles of high security fence, to be built in regions of the border subject to high rates of illegal crossings. To this date only seven miles of fence have been built,[citation needed] with the U.S. Congress wavering on its decision. The Comprehensive Immigration Reform Act of 2007 would have granted illegal immigrants already in the country a way forward to stay and gain citizenship. It would also have provided up to 200,000 placements per year for guest workers. On June 28, 2007, the bill failed cloture in the Senate, largely due to public outcry, and no further action was taken.

The open skies policy is intended to be applied by both of the governments once the Mexican air-transportation industry has been stabilized and Mexico's largest airlines AeroMexico and Mexicana consider themselves able to compete with airlines the size of American Airlines, Continental Airlines and United Airlines.

See also

References

  1. ^ Reforming the North American Development Bank (NADBank) and the Border Environment Cooperation Commission (BECC)
  2. ^ The Caribbean Community
  3. ^ CARICOM AND NAFTA
  4. ^ The 1994 Communique of the CARICOM Heads of Government on NAFTA entry
  5. ^ CNN Larry King Live - Interview with Vicente Fox, CNN, October 8, 2007
  6. ^ Keith Bradsher (17 February 1993). "New Venture Stirs Mexico Trade Issue". New York Times. Retrieved 24 September 2008.
  7. ^ Sam Whiting (30 0ctober 1993). "Canada's Quarrel With Nafta". New York Times. Retrieved 24 September 2008. {{cite web}}: Check date values in: |date= (help)
  8. ^ Bertrand Frank, Letter to the Editor (23 September 1993). "Nafta Maintains U.S. Environment Standards; Garment Workers' Risk". New York Times. Retrieved 24 September 2008. {{cite web}}: |author= has generic name (help)
  9. ^ Barnaby J. Feder (24 September 1993). "Tiny Industry Fears Nafta's Reach". New York Times. Retrieved 24 September 2008.
  10. ^ Peter T. Kilborn (13 October 1993). "Opposites in California Join to Fight Trade Pact". New York Times. Retrieved 24 September 2008.
  11. ^ New York Times Staff Writers (12 July 1993). "News Summary: MEXICAN FEARS OF FREE TRADE". New York Times. Retrieved 24 September 2008.
  12. ^ House Roll Call
  13. ^ Senate Roll Call
    Krauss, Clifford (October 5 1993). "In finagling on trade pact, legislators' barter is votes". The New York Times. p. B10. {{cite news}}: Check date values in: |date= (help)
    Garrett, Major (November 21 1993). "After emotionless debate, Senate votes for NAFTA" (paid archive). The Washington Times. p. A6. {{cite news}}: Check date values in: |date= (help)
  14. ^ Lederman D, W Maloney and L Servén (2005) Lessons from NAFTA for Latin America and the Caribbean: Stanford University Press: Palo Alto, USA
  15. ^ Weintraub S (2004), NAFTA's Impact on North America The First Decade, CSIS Press: Washington, USA
  16. ^ Hufbauer GC and Schott, JJ, NAFTA Revisited, Institute for International Economics, Washington D.C. 2005
  17. ^ THE ORIGIN OF MEXICO'S 1994 FINANCIAL CRISIS
  18. ^ Floudas, Demetrius Andreas & Rojas, Luis Fernando; "Some Thoughts on NAFTA and Trade Integration in the American Continent", 52 (2000) International Problems 371
  19. ^ http://www.ingentaconnect.com/content/beech/iapa/2006/00000024/00000004/art00002
  20. ^ http://www.cec.org/programs_projects/trade_environ_econ/pdfs/frmwrk-e.pdf
  21. ^ www.cec.org/symposium
  22. ^ http://www.ingentaconnect.com/content/beech/iapa/2006/00000024/00000004/art00002;jsessionid=1dy4980hq7bq0.alexandra?format=print
  23. ^ http://www.cec.org/programs_projects/trade_environ_econ/pdfs/Reinert.pdf
  24. ^ Greening the Americas, Carolyn L. Deere (editor). MIT Press, Cambridge, Massachusetts, USA
  25. ^ Template:PDFlink p. 4
  26. ^ U.S.-Mexico Corn Trade During the NAFTA Era: New Twists to an Old Story USDA Economic Research Service
  27. ^ Newswise: Free Trade Agreement Helped U.S. Farmers Retrieved on June 12, 2008.
  28. ^ DHS Yearbook 2006. Supplemental Table 1: Nonimmigrant Admissions (I-94 Only) by Class of Admission and Country of Citizenship: Fiscal Year 2006
  29. ^ [http://www.cic.gc.ca/english/resources/statistics/facts2006/temporary/04.asp Facts and Figures 2006 Immigration Overview: Temporary Residents] (Citizenship and Immigration Canada)
  30. ^ Facts and Figures 2006 - Immigration Overview: Permanent and Temporary Residents
  31. ^ Template:PDFlink, 'Ethyl Corporation vs. Government of Canada'
  32. ^ Template:PDFlink[dead link]
  33. ^ Dispute Settlement
  34. ^ http://www.canadiandriver.com/articles/jk/040310.htm MMT: the controversy over this fuel additive continues
  35. ^ U.S., Canada Reach Final Agreement on Lumber Dispute
  36. ^ softwood Lumber
  37. ^ Statement from USTR Spokesperson Neena Moorjani Regarding the NAFTA Extraordinary Challenge Committee decision in Softwood Lumber
  38. ^ Template:PDFlink
  39. ^ Statement by USTR Spokesman Stephen Norton Regarding CIT Lumber Ruling
  40. ^ NAFTA Trust Claims
  41. ^ a b "U.S. Bureau of Labor Statistics".
  42. ^ Oxfam (2003). "Dumping without Borders: How U.S. Agricultural Policies Are Destroying the Livelihoods of Mexican Corn Farmers" (PDF). Oxfam. Retrieved 2007-03-12. {{cite journal}}: Cite journal requires |journal= (help)
  43. ^ Fiess, Norbert (2004-11-24). "Mexican Corn: The Effects of NAFTA" (PDF). Trade Note. 18. The World Bank Group. Retrieved 2007-03-12. {{cite journal}}: Unknown parameter |coauthors= ignored (|author= suggested) (help)
  44. ^ NAFTA, Chapter 11
  45. ^ http://www.gutenberg.org/dirs/etext93/naftchap.txt
  46. ^ 'North American Free Trade Agreement (NAFTA)', Public Citizen
  47. ^ Red Mexicana de Accion Frente al Libre Comercio. "NAFTA and the Mexican Environment". Archived from the original on 2006-05-21.
  48. ^ The Council of Canadians
  49. ^ The NAFTA environmental agreement: The Intersection of Trade and the Environment
  50. ^ Judge Rebuffs Challenge to NAFTA'S Chapter 11 Investor Claims Process
  51. ^ Template:PDFlink
  52. ^ Template:PDFlink
  53. ^ Gantz, D.A. 1999. “Dispute Settlement Under the NAFTA and the WTO:Choice of Forum Opportunities and Risks for the NAFTA Parties.” American University International Law Review 14(4):1025–1106.
  54. ^ de Mestral, A. 2005. “NAFTA Dispute Settlement: Creative Experiment or Confusion.” Unpublished manuscript, McGill University, Montreal, QC .
  55. ^ What the Public Really Wants on Globalization and Trade
  56. ^ Democrats on NAFTA
  57. ^ Canadians’ Views On Trade Agreements:
  58. ^ In Mexico, U.S. and Canada, Public Support for NAFTA Surprisingly Strong, Given each Country Sees Grass as Greener on the Other Side
  59. ^ Appendix 1603.D.1 of NAFTA
  60. ^ Working temporarily in Canada: Special categories—Business people