Concept in Definition ABC

The acronym NAFTA stands for North American Free Trade, which in Spanish translates as North American Free Trade Agreement (for this reason NAFTA in English is equivalent to NAFTA in Spanish). This body is related to an international agreement between three nations of the continent American: Canada, United States and Mexico.

The trade agreements between the three members came into effect in 1994 and the organizational system is made up of three sections, one for each country.

Main objectives and consequences

In the first place, it is intended to facilitate trade and the movement of goods between the three countries, as well as reduce the commercial costs of companies. At the same time, mechanisms of free competence 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.

Regarding the consequences of NAFTA, the main ones are the following: the creation of the new Mexican peso, the disappearance of government control over some sectors of the

economy, new investments in the 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 government The United States has proposed renegotiating the treaty because it is considered that the exchange commercial is not in the best interest of the United States. In short, the application of the agreement has generated opportunities but also imbalances and harsh criticism.

Free trade agreements

Currently there are various 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 duties in their commercial relations and that there is more commercial activity.

In this sense, if two nations maintain tariffs between themselves, each of them has to pay a tax on the products it exports. For this reason, both nations may consider it interesting that these tariffs gradually disappear and thus sign an FTA between them.

The advantages of FTAs ​​are basically two: the increase in commercial exchanges and the incentive for business competitiveness. Despite this, anti-globalization groups oppose the FTAs ​​because they consider that these agreements benefit the large multinationals but not the whole of the population.

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