The United States of America has always positioned itself as the largest, not only in economic terms, but also in other industries and areas of life of the country. Moreover, during the late 80s of the last century, the collapse of the Soviet Union began, which greatly strengthened the position of the states. But in the field of this problem, new players appeared - uniting Europe and Asia, which provoked the need to form a kind of economic bloc in North America to further protect their own interests on the world stage. The optimal solution in this situation was the formation of such an economic union as the North American free trade zone, which directly included the United States, as well as Mexico and Canada. But this free trade zone was considered by its participants with different goals of entry.
Educational objectives
Naturally, the main goal of the organization was to remove all possible trade barriers in the field of trade between partner countries. It is worth noting that after the entry into force of the agreement from January 1, 1994, almost 50% of all previously existing barriers were automatically removed. At the same time, the remaining restrictions on trade were lifted gradually, practically over the next 14 years. In addition to everything, though not the main, but the task facing the organization, was to counteract the former socialist camp, where the CIS free trade zone was also formed.
In the above text, the concept of organization should not be associated with a certain interstate formation with a specific legislative base and certain regulatory bodies. The free trade zone in America did not initially intend to create a kind of structure like the European Union (the CIS free trade zone can serve as an example), remaining the whole time of its existence exclusively as an intergovernmental economic agreement, nothing more.
Advantages and disadvantages for participating countries
Given the fact that the North American free trade zone did not provide any barriers to trade, the Americans had the opportunity to buy goods from neighboring countries, often cheaper than domestically produced goods. It would seem that the free trade zone infringes on the interests of local producers, but this turned out to be far from the case, as American companies gained huge potential for access to the markets of their neighbors, which significantly increased trade, for example, with Mexico in just the first four years of its existence in more than 2 times. The flip side of the coin is two facts. The first is the leakage of production, and, accordingly, capital to Mexico, since there are initially lower environmental standards and, naturally, cheaper labor. And the second is the influx of emigrants all from the same Mexico with their culture and traditions, often going against the American Protestant ones.
As for the Mexicans, the free trade zone provided them with an excellent opportunity to enter the markets of the rest of the world, based on the authority and potential of the United States. Again, thanks to these weighty arguments, the influx of foreign investment into the country sharply increased, which was a significant impetus to the development of the economy and allowed abandoning the introduced import substitution program in those years.
If we talk about Canada, it should be noted that it is potentially located in terms of its economic opportunities between the United States and Mexico. Thus, Canadians throughout the entire period of the agreement’s existence tried to consolidate precisely with Mexico in defending their interests against the States, which, sometimes, tried to make certain decisions based on their potential, but contrary to the opinion of other participating countries.