Nevertheless, there is something great about this confusion between NAFTA and the letters of globalization. The agreement “launched a new generation of trade agreements in the Western Hemisphere and other parts of the world,” the CRS writes, so NAFTA has rightly become an acronym for 20 years of broad diplomatic, political and trade consensus that free trade is generally a good thing. The Law of Comparative Advantage is popularly attributed to the English political economist David Ricardo and his book On the Principles of Political Economy and Taxation in 1817, although it is likely that Ricardo`s mentor, James Mill, carried out the analysis. David Ricardo, as you know, has shown how England and Portugal both benefit by specializing and acting according to their comparative advantages. In this case, Portugal was able to make wine at a low price, while England was able to make cheap cloth. Indeed, both countries had seen that it was to their advantage to cease their efforts to manufacture these objects in their own countries and to trade them to acquire them. The United States will participate from 2019 in 14 free trade zones with 20 countries. One of the most well-known and important free trade zones was the signing of the North American Free Trade Agreement (NAFTA) on January 1, 1994. This agreement between Canada, the United States and Mexico promotes trade between these North American countries.

In 2018, the United States, Canada and Mexico signed the U.S.-Mexico-Canada Agreement (USMCA) to partially update and cancel NAFTA. Overall, the United States currently has 14 trade agreements with 20 different countries. Finally, the 2008 financial crisis had a profound impact on the global economy, making it difficult to determine the effect of a trade agreement. Apart from some areas where the effect is not yet entirely clear, NAFTA has had a fairly obvious impact on the North American economies. The fact that it is now in danger of being abolished probably has little to do with its own merits or mistakes, and much more so with automation, the rise of China and the political consequences of September 11 and the 2008 financial crisis. It should be noted that with regard to the qualification of the original criteria, there is a difference in treatment between inputs originating and outside a free trade agreement. Inputs originating from a foreign party are normally considered to originate from the other party when they are included in the manufacturing process of that other party. Sometimes the production costs generated by one party are also considered to be those of another party.

Preferential rules of origin generally provide for such a difference in treatment in determining accumulation or accumulation. This clause also explains the impact of a free trade agreement on the creation and diversion of trade, since a party to a free trade agreement is encouraged to use inputs from another party to allow its products to originate. [22] The FTR Dominican Republic-Central America (CAFTA-DR) is a free trade agreement between the United States and the small central American economies. It is called El Salvador, Dominican Republic, Guatemala, Costa Rica, Nicaragua and Honduras. NAFTA replaced bilateral agreements with Canada and Mexico in 1994. The United States renegotiated NAFTA as part of the U.S.-Mexico agreement, which came into effect in 2020. Canada recorded a more modest increase in trade with the United States than Mexico as a result of NAFTA, with an inflation-adjusted 63.5% (Canada-Mexico trade remains negligible). Unlike Mexico, it has no trade surplus with the United States.

While it sells more goods in the United States than it buys, a large trade deficit in the services sector with its southern neighbour brings the total balance to $11.9 billion in 2015. Free trade policy has not been as popular with the general public. Key issues include unfair competition from countries where lower labour costs reduce prices and the loss of well-paying jobs for producers at the