The acronyms NAFTA stands for North American Free Trade, which in Portuguese can be translated as the North American Free Trade Agreement (for this reason, NAFTA in English is equivalent to TLCAN in Portuguese). This body is related to an international agreement between three nations on the American continent : Canada, the United States and Mexico.
Trade agreements between the three members entered into force in 1994 and the organizational system is composed of three sections, one for each country.
Main objectives and consequences
First, the aim is to facilitate trade and the movement of goods between the three countries, as well as to reduce business costs. At the same time, free competition mechanisms and investment opportunities are promoted . At the same time, the treaty aims to better compete with other regions of the planet, especially the European Union . NAFTA
As for the consequences of NAFTA, the main ones are: creation of the new Mexican peso, disappearance of government control over some sectors of the economy, new investments in the Mexican territory accompanied by an increase in temporary work, tensions between the governments of the United States and Mexico , etc.
Since the beginning of Donald Trump’s term, the US government has proposed to renegotiate the treaty, as it considers that commercial exchange does not benefit US interests.
In summary , the application of the agreement has generated opportunities, but also imbalances and harsh criticism.
Free Trade Agreements
Currently, there are several international treaties related to free trade, which are known as FTA. All of them have a common denominator: that the countries involved do not have customs tariffs in their commercial relations and that there is greater commercial activity. NAFTA
In this sense, if two nations maintain their customs tariffs, each must pay a tax for the products they export.
For this reason, both nations may find it interesting that these tariffs progressively disappear and thus sign a FTA.
The advantages of FTAs are basically two: increased trade exchanges and encouragement of business competitiveness. Despite this, anti-globalization groups are opposed to the FTAs because they believe that these agreements benefit the large multinationals, but not the population as a whole. NAFTA