NAFTA

NAFTA

In a recent version of the Good Neighbor Policy, the world`s largest free trade area was created when the United States, Canada and Mexico launched the North American Free Trade Agreement (NAFTA). That agreement has brought economic growth and higher standards of living for all three countries, and is committed to helping the partners to realize a more integrated and efficient North American economy.

NAFTA took effect on January 1, 1994. The agreement immediately lifted tariffs on the majority of goods produced by the signatory nations. It also called for the gradual elimination, over a period of 15 years, of most remaining barriers to cross-border investment and to the movement of goods and services among the three countries. Major industries affected include agriculture, automobile and textile manufacture, telecommunications, financial services, energy, and trucking. NAFTA was followed by the signing of the General Agreement on Tariffs and Trade (GATT/World Trade Organization (WTO), also in 1994.

The WTO administers a variety of agreements, covering, among other things, trade in goods, trade in services, foreign investment, government procurement, and intellectual property. Such regional trade agreements as NAFTA interact with the global regime in ways that can make or break a firm’s business strategy. Moreover, regional trade agreements can offer clues to the directions in which global agreements may be headed.

Like any multinational treaty, NAFTA has its pros and cons, its cheerleaders and detractors. More than 10 years after the treaty was signed, protests continue, especially by citizenry "south of the border." NAFTA seems to favor North America`s big business over the needs of Latin America`s indigenous peoples. While jobs may have been created in Latin America, the pay is generally low and available jobs are far from home. The benefits appear to go to governments, rich land owners, and large businesses.

The new NAFTA economies apparently have disrupted traditional agrarian lifeways as well. Formerly successful agrarian families, once able to send their children to college, find the markets for their traditional crop, such as corn, have been undercut by multinational agricultural corporations. The small farmers can`t sell their corn at a profitable price.

No official NAFTA compensation or reparations structure seems to exist to cope with the widespread disenfranchisement of indigenous families dependant on traditional, but obsolete local economies.

The following information is derived from the official NAFTA website:

Preamble

The Government of Canada, the Government of the United Mexican States and the Government of the United States of America, resolve to:

  • strengthen the special bonds of friendship and cooperation among their nations;
  • contribute to the harmonious development and expansion of world trade and provide a catalyst to broader international cooperation;
  • create an expanded and secure market for the goods and services produced in their territories;
  • reduce distortions to trade;
  • establish clear and mutually advantageous rules governing their trade;
  • ensure a predictable commercial framework for business planning and investment;
  • build on their respective rights and obligations under the General Agreement on Tariffs and Trade and other multilateral and bilateral instruments of cooperation;
  • enhance the competitiveness of their firms in global markets;
  • foster creativity and innovation, and promote trade in goods and services that are the subject of intellectual property rights;
  • create new employment opportunities and improve working conditions and living standards in their respective territories;
  • undertake each of the preceding in a manner consistent with environmental protection and conservation;
  • preserve their flexibility to safeguard the public welfare;
  • promote sustainable development;
    strengthen the development and enforcement of environmental laws and regulations; and
  • protect, enhance, and enforce basic workers` rights.
  • The NAFTA agreement among Canada, the United States, and Mexico, was signed by President George H.W. Bush in 1992. However, it still had to be approved by Congress. A tough battle ensued despite high-level support in both major parties. The following year, President Bill Clinton mustered all of his political clout to push the measure through Congress. The office of Republican representative Gerald Solomon of New York circulated a list of some 37 special side deals and pork barrel projects the Clinton Administration used to buy passage of the trade agreement. The president`s November 17th political victory in the House of Representatives arrived by a 234 to 200 vote.

    Detractors of NAFTA point out chapter 20, which mandated the creation of a North American "Free Trade Commission" and a vast new bureaucracy under the commission called the "Secretariat." The NAFTA Secretariat, comprising three Sections — Canadian, Mexican and United States — is responsible for the administration of the dispute settlement provisions of the agreement.

    Former secretary of state Henry Kissinger, a member of the Trilateral Commission`s executive committee and a longtime power in the Council on Foreign Relations (CFR), called the vote on NAFTA the single most important decision that Congress would make during Mr. Clinton`s first term. Indeed, Kissinger acknowledged in the Los Angeles Times that passage "will represent the most creative step toward a new world order taken by any group of countries since the end of the Cold War. ." NAFTA "is not a conventional trade agreement," he asserted, "but the architecture of a new international system."

    Democratic representative Robert Matsui of California, another NAFTA supporter, candidly admitted that the agreement brings with it a surrender of American "independence." NAFTA supporter Democratic Senator Max Baucus of Montana bragged about the "iron fist" of the pact.

    U.S. Trade Representative Mickey Kantor, the negotiator of the "side agreement" on the environment, said officially that "No nation can lower labor or environmental standards, only raise them." In the August 17, 1993 edition of the Wall Street Journal, Kantor said that "No country in the agreement can lower its environmental standards — ever."


    North American Free Trade Agreement

    North American Free Trade Agreement (NAFTA) established a free-trade zone in North America it was signed in 1992 by Canada, Mexico, and the United States and took effect on Jan. 1, 1994. NAFTA immediately lifted tariffs on the majority of goods produced by the signatory nations. It also calls for the gradual elimination, over a period of 15 years, of most remaining barriers to cross-border investment and to the movement of goods and services among the three countries.

    The following information is advisory only. The webpage is not responsible for damages caused by following the links and any information contained therein.

    Advance Rulings

    An advance ruling is a written document received from the customs authority from a NAFTA country. It provides binding information on specific NAFTA questions you may have about future imports of goods into Canada, Mexico and the United States.

    Annex 401

    Annex 401 of the NAFTA provides the specific rule of origin that is applied to determine whether a good qualifies as an originating good under the terms of the NAFTA.

    These procedures are used by importers, exporters or producers of goods to request a second review of NAFTA decisions given by the customs administrations.

      of the NAFTA - Review and Appeal of Adverse Marking Decisions can be found in sections 181.111 &ndash 181.116 - Origin Determination Appeals

    Certificate of Origin

    This is a trilaterally agreed upon form used by Canada, Mexico, and the United States to certify that goods qualify for the preferential tariff treatment accorded by NAFTA. The Certificate of Origin must be completed by the exporter. A producer or manufacturer may also complete a certificate of origin in a NAFTA territory to be used as a basis for an Exporter&rsquos Certificate of Origin. To make a claim for NAFTA preference, the importer must possess a certificate of origin at the time the claim is made.

    Claiming Preferential Treatment

    A claim for preferential treatment is usually made at the time of importation on the customs document used by the importing country. The Agreement allows NAFTA claims up to one year from the date of importation. The procedures for presenting a NAFTA claim are different in Canada, Mexico, and the United States.

    Commercial Samples and Printed Advertising Materials

      of the NAFTA - Duty-Free Entry of Certain Commercial Samples and Printed Advertising Materials - Commercial Samples of Negligible Value can be found in section 181.62

    Commodity Specific Information

    This section contains NAFTA specific information on certain traded commodities.

    Confidentiality

    Article 507(1) of the NAFTA, requires that each country protect the confidentiality of business information provided to them in the course of conducting government business. In addition, the governments of Canada, Mexico and the United States must ensure that this business information is not disclosed to third parties and does not prejudice the competitive positions of the persons providing the information.

    Article 507 of the NAFTA - Confidentiality

    19 CFR 181 Subpart K - Confidentiality of Business Information

    Country of Origin Marking

    Country of origin marking is used to clearly indicate to the ultimate purchaser of a product where it is made. NAFTA marking rules are also used to determine the rate of duty, staging and country of origin applicable for NAFTA goods.

      - Country of Origin Marking - Country of Origin Marking - Rules of Origin - Rules of Origin - Textiles and textile products country of origin - Review and Appeal of Adverse Marking Decisions
      • Note: U.S. Customs Rulings are available at Customs Rulings Online Search System (CROSS)

      Currency Conversion

      Currency conversion is a means to determine the value of a good or material when currency is expressed in a currency other than that of the producer. The currency used in Canada is the Canadian dollar. In Mexico, it is the peso. The United States uses the American dollar.

      Customs Procedures

      This topic includes various subjects such as Certificate of Origin, Advance Rulings, NAFTA Claims, Verifications, Determinations, and Appeals to name a few. This information is gathered from a variety of Customs published documents.

      Advance Rulings
      An advance ruling is a written document received from the customs authority from a NAFTA country. It provides binding information on specific NAFTA questions you may have about future imports of goods into Canada, Mexico and the United States.

      Certificate of Origin
      This is a trilaterally agreed upon form used by Canada, Mexico, and the United States to certify that goods qualify for the preferential tariff treatment accorded by NAFTA. The Certificate of Origin must be completed by the exporter. A producer or manufacturer may also complete a certificate of origin in a NAFTA territory to be used as a basis for an Exporter&rsquos Certificate of Origin. To make a claim for NAFTA preference, the importer must possess a certificate of origin at the time the claim is made.

      Confidentiality
      Article 507(1) of the NAFTA, requires that each country protect the confidentiality of confidential business information provided to the them in the course of conducting government business. In addition, the governments of Canada, Mexico and the United States must ensure that this business information is not disclosed to third parties and does not prejudice the competitive positions of the persons providing the information.

      Country of Origin Marking
      Country of origin marking is used to clearly indicate to the ultimate purchaser of a product where it is made. NAFTA marking rules are also used to determine the rate of duty, staging and country of origin applicable for NAFTA goods.

      Exporter Obligations - Article 504 of the NAFTA

      Generally Accepted Accounting Principles (GAAP) - Appendix to 19 CFR 181, Schedule XII

      Importer Obligations - Article 502 of the NAFTA

      Verifications
      Verifications is the process used to by the customs authorities to determine whether a good qualifies as NAFTA originating when a preferential duty rate has been claimed.

      RECORDKEEPING

      All records related to a preferential duty claim under NAFTA must be kept for a minimum of five years.

        of the NAFTA - Records - Maintenance and availability of records - Maintenance of records and submission of Certificate by importer - Retention of records

      APPEALS
      These procedures are used by importers, exporters or producers of goods to request a second review of NAFTA decisions given by the customs administrations.


      NAFTA - History

      There was no ambiguity in last night's Democratic debate when it came to NAFTA. Both candidates plainly said that they were willing to dump the trade treaty absent a renegotiation. "I have been a critic of NAFTA from the very beginning," Senator Hillary Clinton began, notwithstanding, apparently, frequent comments to the contrary. She went on to suggest a "trade timeout": "I have put forward a very specific plan about what I would do, and it does include telling Canada and Mexico that we will opt out unless we renegotiate the core labor and environmental standards -- not side agreements, but core agreements that we will enhance the enforcement mechanism'¦" Obama backed her up.

      This did not mean, however, that either candidate actually expects to confront that decision. When Moderator Tim Russert pressed her ("Absent the change that you're suggesting, you are willing to opt out of NAFTA in six months?"), Senator Clinton responded, "I'm confident that as president, when I say we will opt out unless we renegotiate, we will be able to renegotiate." (The New York Times has a nifty interactive debate feature that allows you to go to a discussion of a specific issue and simultaneously watch the exchange and read the transcript.)

      Of course, to do that, either would-be president would have to overcome stiff resistance in Congress'¦from Democrats. (Including former Clinton aide Rahm Emmanuel.) As the Agenda has noted before, when it comes to trade, Democrats have a habit of talking one way and voting another. Indeed, National Public Radio's trade correspondent, Adam Davidson, helpfully points out that while Clinton and Obama "didn't vote on NAFTA when it passed," since neither was in the Senate back in 1994 (Obama was just 13 years old!*), "they have both voted in favor of most free trade deals when they have had a chance."

      Davidson's comment comes at the end of a useful deconstruction of NAFTA's place in the Ohio primary campaign. Turns out the economists Davidson interviewed, including the lefty, NAFTA-hating one, don't credit NAFTA as the source of Ohio's woes. (In the debate, Russert noted that Ohio ranks fourth among states in exports to Canada and Mexico.) Rather, they blame the ineptitude of the big flailing automakers and trade with -- wait for it &mdash China. So why, then, is NAFTA so despised? According to an AFL-CIO official in Ohio, it's because the unions made NAFTA their last stand. "Workers know about NAFTA," she said, "because we did a lot of education around the impact of NAFTA and what it would do when it was passing through legislation, back in the '90s."

      UPDATE, 4:24 PM ET: New York Times columnist David Leonhardt shrewdly compares the Democrats' two-facedness on trade to the Republican position on abortion. (Though the analogy really only holds up when you're talking about the national GOP, not the state parties.) The economists Leonhardt interviewed say that the best way help Ohio is with "more government investment in infrastructure, the medical sciences, alternative energy and other areas that could produce good new jobs," as well as a more progressive tax code that cuts taxes for workers. As Leonhardt points out, both Democrats support such policies.


      The rocky history of NAFTA

      MEXICO CITY (Reuters) - Negotiators from Canada, Mexico and the United States kicked off a second round of talks about the North American Free Trade Agreement (NAFTA) on Friday as the countries try to fast-track a deal to modernize the treaty by early next year.

      Following are key moments in the history of the deal:

      * June 10, 1990: U.S. President George H.W. Bush and Mexican President Carlos Salinas de Gortari endorse a new, comprehensive free trade pact between the two neighbors, ordering talks to begin. Canada join the talks in 1991, paving the way for three-way negotiations. The United States and Canada signed a bilateral free trade deal in 1988.

      * Nov. 3, 1992: Running as an independent for president in the United States, Ross Perot claims the proposed NAFTA would lead to a “giant sucking sound” of jobs rushing to Mexico. Bill Clinton wins the election, defeating incumbent Bush. Perot wins 19 percent of the vote to place a strong third.

      * Dec. 17, 1992: NAFTA is signed by outgoing Bush, Mexico’s Salinas de Gortari and Canadian Prime Minister Brian Mulroney, creating the world’s largest free trade area. The timing was, in part, aimed at making it harder for President-elect Clinton to pursue major changes Clinton had endorsed the deal but insisted on environmental and labor side agreements.

      * Jan. 1, 1994: NAFTA comes into effect, and the Maya Indian Zapatista guerrilla army in southern Mexico launches an armed rebellion against “neo-liberalism” and explicitly against the free trade deal. The declaration of war against the Mexican government leads to days of fighting and dozens of deaths before the rebels retreat into the jungle.

      * Nov. 30, 1999: Tens of thousands of anti-globalization protesters converge on the U.S. city of Seattle, leading to widespread rioting coinciding with a ministerial conference of the World Trade Organization, which was seeking to launch new international trade talks. The protests underscore growing, if scattered, opposition to free trade deals like NAFTA.

      * Dec. 11, 2001: China formally joins the World Trade Organization, integrating the Asian giant more deeply into the global economy. Easing trade with China intensifies a trend that had been seen since NAFTA came into effect as the U.S. trade deficit soared to more than $800 billion by 2006.

      * July 16, 2004: Senior trade officials from Canada, the United States and Mexico issue a joint statement touting a decade’s worth of expanded trade in North America. Three-way-trade more than doubled to reach $623 billion while cumulative foreign direct investment increases by over $1.7 trillion compared to pre-NAFTA levels.

      * Jan. 1, 2008: NAFTA is fully implemented as the last of its polices come into effect. In sensitive sectors such as sugar, NAFTA stipulates that trade barriers would only gradually be phased out, which was designed to smooth economic shocks in vulnerable industries. By this time, trade within the three North American nations has more than tripled.

      * July 19, 2016: Billionaire businessman and political outsider Donald Trump formally clinches the Republican presidential nomination, winning the traditionally pro-free-trade party’s nod in part by denouncing NAFTA, calling it “the worst trade deal ever.”

      * Aug. 16, 2017: High-stakes talks aimed at “modernizing” NAFTA kick off in Washington, with both U.S. and Mexican officials aiming to conclude a new pact in early 2018 before elections later in the year in both nations might derail negotiations. A second round of talks takes place in Mexico in September.

      * Sept. 1, 2017: In the week ahead of the second round of talks in Mexico which begin on Sept. 1, Trump had said repeatedly he would likely end the agreement if negotiations did not go his way. Mexico said it would walk away from the table if Trump began the process of withdrawing from NAFTA.


      The North American Free Trade Agreement: Ronald Reagan's Vision Realized

      The approval by the Congress of the North American Free Trade Agreement (NAFTA) is a victory of engagement and competition over withdrawal and complacency. The trade pact, which will eliminate tariffs on goods and services between the United States, Canada, and Mexico over a fifteen-year time span, will create the world's largest market: some 360 million people, with an economic output of more than $6 trillion a year. The NAFTA thus guarantees that American workers will remain the most competitive in the world and that American consumers will continue to have access to the world's finest goods and services.

      The North American free trade area that the agreement creates will produce 25 percent more goods and services than the European Community, giving North America enough economic muscle to challenge the emerging unified market in Europe and an East Asia market dominated by Japan. The NAFTA also will offer Americans cheaper goods, and increase U.S. exports by making them more affordable for the rest of the world. Moreover, it will create an estimated 200,000 new jobs for Americans, reduce illegal immigration from Mexico, help tackle drug trafficking, strengthen Mexican democracy and human rights, and serve as a model for the rest of the world.

      President Clinton has correctly described the agreement as "just a first step," stressing that he will reach out to other Latin American countries in an effort to spread free trade throughout the hemisphere. In so doing, he will move even closer to the conservative vision of a hemisphere-wide free trade area.

      Long-Standing Support for Free Trade with Mexico. Ronald Reagan first proposed a free trade agreement between the U.S. and Mexico in his 1980 presidential campaign. Since that time, The Heritage Foundation is proud of the role it has played in articulating President Reagan's vision of free trade in Latin America and around the world. Since the mid-1980s, Heritage analysts have been stressing that a free trade agreement with Mexico not only will stimulate economic growth in the U.S., but will make Mexico a more stable and prosperous country. Heritage has published over three dozen studies stressing the benefits of free trade in North America.

      The Foundation also has highlighted the Mexican success story. Under the leadership of Mexican President Carlos Salinas de Gortari, Mexico has moved further and faster than practically any other country in the world in promoting free market reforms and free trade. The approval of the NAFTA by the Congress is a recognition of these historic advances and will help ensure that the momentum in favor of economic and political liberty throughout the Americas is maintained.

      In June 1986, then-Heritage analyst Edward L. Hudgins wrote "A U.S. Strategy to Solve Mexico's Debt Crisis." In that Backgrounder, Hudgins urged the Reagan Administration to "explore further special free trade and investment arrangements" with Mexico. Said Hudgins: "The possibility of a complete free trade and investment zone [between the U.S. and Mexico] should be explored. Ultimately, a complete Free Trade Area between the U.S. and Mexico should be sought, similar to the U.S.-Canada pact [then] being negotiated."

      Four years later, Heritage analyst Michael Wilson argued in an Executive Memorandum entitled "Bush and Salinas Should Launch Free Trade Talks Between the U.S. and Mexico": "What were once distant neighbors now appear to be developing into economic and geopolitical partners. George Bush should strengthen this cooperative relationship not only by supporting Salinas's economic reforms, but by moving quickly to negotiate a free trade agreement with Mexico."

      The Politics of Fear vs. the Politics of Hope. The approval of the NAFTA not only represents a victory for the U.S. economy and the American people, it also deals a blow to organized labor and other protectionist forces. The agreement reaffirms the American commitment to competition and free enterprise that other nations emulate.

      By supporting the NAFTA, the Clinton Administration and a majority of Congress wisely rejected calls for a return to the same protectionist policies, demonstrated by the Smoot-Hawley tariff laws, which helped create the Great Depression. Many of these protectionist calls were from labor unions concerned that the NAFTA would cost U.S. jobs in older industries. Despite such concerns, though, labor will see that, as consumers in a growing economy, they too are better off when nations are free to trade with one another and workers are exposed to the rigors of international competition.

      Looking to the Future. President Clinton should ride the free trade momentum that conservatives have given him and reaffirm his support for free trade agreements with other Latin American countries, namely Chile, Argentina, and Venezuela. He has wisely voiced his support for George Bush's vision of an Enterprise for the Americas, which seeks to create a free trade area stretching from Alaska to Antarctica. Latin America is the fastest growing market for the U.S. and the only region where America enjoys a trade surplus. Every Latin American leader, from Carlos Menem in Argentina to Patricio Aylwin in Chile, has voiced support for free trade with the U.S. The Clinton Administration should begin negotiating free trade agreements with them.

      President Clinton should also extend the offer of free trade to America's partners in Europe and Asia. A successful conclusion of the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) in December would be a welcome first step in that direction, as would the President's disavowal of "managed trade" ideas in the wake of the meeting of Asian-Pacific Economic Cooperation (APEC) leaders last week in Seattle.

      The NAFTA win is a great victory for free trade conservatives. It was they who first championed the notion of free trade with Mexico. And it is they who will carry the banner of free trade in the future -- a banner under which even Bill Clinton now marches.


      Timeline - Opposed from the start, the rocky history of NAFTA

      (Reuters) - Negotiators from Canada, Mexico and the United States kick off an ambitious first round of trade talks on Wednesday as the countries try to fast-track a deal to modernize the North American Free Trade Agreement by early next year. Following are significant moments in the history of the deal:

      * June 10, 1990: U.S. President George H.W. Bush and Mexican President Carlos Salinas de Gortari issue a statement endorsing a new, comprehensive free trade pact between the two neighbours, ordering talks to begin. Canada would join the talks in 1991, paving the way for three-way negotiations. The United States and Canada inked a bilateral free trade deal in 1988.

      * Nov. 3, 1992: Running as an independent for president in the United States, Ross Perot claims the proposed North American Free Trade Agreement (NAFTA), would lead to a “giant sucking sound” of jobs rushing to Mexico. Bill Clinton wins the election, defeating incumbent Bush. Perot wins 19 percent of vote to place a strong third.

      * Dec. 17, 1992: NAFTA is signed by outgoing Bush, Mexico’s Salinas de Gortari and Canadian Prime Minister Brian Mulroney, creating the world’s largest free trade area. The timing was, in part, aimed at making it harder for President-elect Clinton to pursue major changes Clinton had endorsed the deal but insisted on environmental and labour side agreements.

      * Jan. 1, 1994: NAFTA comes into effect, and a Mayan Indian guerrilla army in southern Mexico launches an armed rebellion against “neo-liberalism” and explicitly against the free trade deal. The declaration of war against the Mexican government leads to days of fighting and dozens of deaths before the rebels retreat into the jungle.

      * Nov. 30, 1999: Tens of thousands of anti-globalisation protesters converge on the U.S. city of Seattle, leading to widespread rioting coinciding with a ministerial conference of the World Trade Organisation, which was seeking to launch new international trade talks. The protests underscore growing, if scattered, opposition to free trade deals like NAFTA.

      * July 16, 2004: Senior trade officials from Canada, the United States and Mexico issue a joint statement touting a decade’s worth of expanded trade in North America. Three-way-trade more than doubled to reach $623 billion while cumulative foreign direct investment increases by over $1.7 trillion compared to pre-NAFTA levels.

      * Dec. 11, 2001: China formally joins the World Trade Organisation, integrating the Asian giant more deeply into the global economy. Easing trade with China intensifies a trend that had been seen since NAFTA came into effect as the U.S. trade deficit soared to more than $800 billion by 2006.

      * Jan. 1, 2008: NAFTA is fully implemented as the last of its polices come into effect. In many sectors, NAFTA stipulates that trade barriers would only gradually be phased out, which was designed to smooth economic shocks in vulnerable industries. By this time, trade within the three North American nations has more than tripled since NAFTA began.

      * July 19, 2016: Billionaire businessman and political outsider Donald Trump formally clinches the Republican presidential nomination, winning the traditionally pro-free-trade party’s nod in part by denouncing NAFTA, calling it “the worst trade deal ever.”


      U.S. Manufacturing Jobs

      NAFTA's implementation has coincided with a 30% drop in manufacturing employment, from 17.7 million jobs at the end of 1993 to 12.3 million at the end of 2016.  

      Whether NAFTA is directly responsible for this decline is difficult to say, however. The automotive industry is usually considered to be one of the hardest-hit by the agreement. But although the U.S. vehicle market was immediately opened up to Mexican competition, employment in the sector grew for years after NAFTA's introduction, peaking at nearly 1.3 million in October 2000. Jobs began to slip away at that point, and losses grew steeper with the financial crisis. At its low in June 2009, American auto manufacturing employed just 623,000 people. While that figure has since risen to 948,000, it remains 27% below its pre-NAFTA level.  

      Anecdotal evidence supports the idea that these jobs went to Mexico. Wages in Mexico are a fraction of what they are in the U.S. All major American car makers now have factories south of the border, and prior to Trump's Twitter campaign against offshoring, a few were openly planning to ship more jobs abroad. Yet while the job losses are tough to deny, they may be less severe than in a hypothetical NAFTA-less world.

      The CRS notes that "many economists and other observers have credited NAFTA with helping U.S. manufacturing industries, especially the U.S. auto industry, become more globally competitive through the development of supply chains." Carmakers did not move their entire operations to Mexico. They now straddle the border. A 2011 working paper by the Hong Kong Institute for Monetary Research estimates that a U.S. import from Mexico contains 40% U.S. content. For Canada, the corresponding figure is 25%. Meanwhile, it is 4% for China and 2% for Japan.

      While thousands of U.S. auto workers undoubtedly lost their jobs as a result of NAFTA, they may have fared worse without it. By integrating supply chains across North America, keeping a significant share of production in the U.S. became an option for carmakers. Otherwise, they may have been unable to compete with Asian rivals, causing even more jobs to depart. "Without the ability to move lower-wage jobs to Mexico we would have lost the whole industry," UC San Diego economist Gordon Hanson told The New York Times in March 2016. On the other hand, it may be impossible to know what would have happened in a hypothetical scenario.

      Garment manufacturing is another industry that was particularly hard-hit by offshoring. Total employment in the sector has declined by nearly 85% since NAFTA was signed,   but according to the Commerce Department, Mexico was only the sixth-largest source of textile imports in 2019 to the tune of $4.1 billion. The country was still behind other international manufacturers including:

      • China: $35.9 billion
      • Vietnam: $10.5 billion
      • India: $6.7 billion
      • Bangladesh: $5.1 billion
      • Indonesia: $4.6 billion

      Not only are none of these other countries members of NAFTA, but none also has a free trade agreement with the U.S.


      Contents

      The word naphtha is from Latin and Ancient Greek (νάφθα), derived from Middle Persian naft ("wet", "naphtha"), [3] [4] the latter meaning of which was an assimilation from the Akkadian napṭu (see Semitic relatives such as Arabic نَفْط nafṭ ["petroleum"], Syriac ܢܰܦܬܳܐ naftā) and Hebrew נֵפְט neft (meaning petroleum). [5] In Ancient Greek, it was used to refer to any sort of petroleum or pitch.

      In the Song of the Three Children the Greek word νάφθα designates one of the materials used to stoke the fiery furnace. The translation of Charles Brenton renders this as "rosin".

      The book of II Maccabees tells how a "thick water" was put on a sacrifice at the time of Nehemiah and when the sun shone it caught fire. It adds that "those around Nehemiah termed this 'Nephthar', which means Purification, but it is called Nephthaei by the many." [6]

      It enters the word napalm, a contraction of the "na" of naphthenic acid and "palm" of palmitic acid, originally made from a mixture of naphthenic acid combined with aluminium and magnesium salts of palmitic acid. Naphtha is the root of the word naphthalene, and can also be recognised in the word phthalate, and the paint colour phthalo blue.

      In older usage, "naphtha" simply meant crude oil, but this usage is now obsolete in English. It was also used for mineral spirits (also known as "Stoddard Solvent"), originally the main active ingredient in Fels Naptha laundry soap. The Ukrainian and Belarusian word нафта (nafta), Lithuanian, Latvian and Estonian "nafta" and the Persian naft ( نفت ) mean "crude oil". The Russian word нефть (neft') means "crude oil", but нафта (nafta) is a synonym of ligroin. Also, in Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Finland, Italy, Serbia, Slovenia, Macedonia nafta (нафта in Cyrillic) is colloquially used to indicate diesel fuel and crude oil. In the Czech Republic and Slovakia, nafta was historically used for both diesel fuel and crude oil, but its use for crude oil is now obsolete [7] and it generally indicates diesel fuel. In Bulgarian, nafta means diesel fuel, while neft, as well as petrol (петрол in Cyrillic), means crude oil. Nafta is also used in everyday parlance in Argentina, Paraguay and Uruguay to refer to gasoline/petrol. [8] In Poland, the word nafta means kerosene, [9] and colloquially crude oil (technical name for crude oil is ropa naftowa, also colloquially used for diesel fuel as ropa). In Flemish, the word naft is used colloquially for gasoline. [10]

      There is a hypothesis that the word is connected with the name of the Indo-Iranian god Apam Napat, which occurs in Vedic and in Avestic the name means "grandson of (the) waters", and the Vedas describe him as emerging from water golden and shining "with bright rays", perhaps inspired by a burning seepage of natural gas. [11]

      Various qualifiers have been added to the term "naphtha" by different sources in an effort to make it more specific:

      One source [12] distinguishes by boiling point:

      Light naphtha is the fraction boiling between 30 °C and 90 °C and consists of molecules with 5–6 carbon atoms. Heavy naphtha boils between 90 °C and 200 °C and consists of molecules with 6–12 carbon atoms.

      Another source [13] differentiates light and heavy comments on the hydrocarbon structure, but offers a less precise dividing line:

      Light [is] a mixture consisting mainly of straight-chained and cyclic aliphatic hydrocarbons having from five to six carbon atoms per molecule. Heavy [is] a mixture consisting mainly of straight-chained and cyclic aliphatic hydrocarbons having from seven to nine carbon atoms per molecule.

      Both of these are useful definitions, but they are incompatible with one another and the latter does not provide for mixes containing both six and seven carbon atoms per molecule. These terms are also sufficiently broad that they are not widely useful.

      Heavy crude oil dilution Edit

      Naphtha is used to dilute heavy crude oil to reduce its viscosity and enable/facilitate transport undiluted heavy crude cannot normally be transported by pipeline, and may also be difficult to pump onto oil tankers. Other common dilutants include natural-gas condensate, and light crude. However, naphtha is a particularly efficient dilutant and can be recycled from diluted heavy crude after transport and processing. [14] [15] [16] The importance of oil dilutants has increased as global production of lighter crude oils has fallen and shifted to exploitation of heavier reserves. [15]

      Fuel Edit

      Light naphtha is used as a fuel in some commercial applications. One notable example is wick-based cigarette lighters, such as the Zippo, which draw “lighter fluid” - naphtha - into a wick from a reservoir to be ignited using the flint and wheel.

      It is also a fuel for camping stoves and oil lanterns, known as “white gas”, where naphtha’s low boiling point making it easy to ignite. Naphtha is sometimes preferred over kerosene due to a lower incidence of fuel line clogging.

      Plastics Edit

      Naphtha is a crucial component in the production of plastics. [17]

      The safety data sheets (SDSs) from various naphtha vendors are also indicative of the non-specific nature of the product and reflect the considerations due for a flammable mixture of hydrocarbons: flammability, carcinogenicity, skin and airway irritation, etc. [18] [2] [19] [20]

      Humans can be exposed to naphtha in the workplace by inhalation, ingestion, dermal contact, and eye contact. The US Occupational Safety and Health Administration (OSHA) has set the permissible exposure limit for naphtha in the workplace as 100 ppm (400 mg/m 3 ) over an 8-hour workday. The US National Institute for Occupational Safety and Health (NIOSH) has set a recommended exposure limit (REL) of 100 ppm (400 mg/m 3 ) over an 8-hour workday. At levels of 1000 ppm, which equates to 10% of the lower explosive limit, naphtha is immediately dangerous to life and health. [21]


      US-Latin American Trade Before and After NAFTA

      The North American Free Trade Agreement (NAFTA) went into effect on January 1st, 1994. The goal of the agreement was to eliminate barriers to help promote positive trade and investment between the United States, Canada, and Mexico. To accomplish this, tariffs were eradicated over time and almost “all duties and quantitative restrictions…were eliminated by 2008,” (“North American Free Trade Agreement”). Despite the claims that’s NAFTA would have large, substantive effects on these three countries, the legitimacy of the effects and the usefulness of the agreement have been called into question continually over the years, especially in regard to the economic relations between Mexico and the US. While there have been positive effects on trade between these countries and on GDP in the US, there have also been negative effects, such as the fact that the US continually loses jobs as a result of the agreement, as well as the worsened inequality and the harmful consequences for small businesses and farmers in Mexico. Although there are many ways to assess the overall outcome of NAFTA and whether or not it was worth it, one perspective to take is the change in US trade with other Latin American countries since NAFTA came into effect. By looking at the growth in trade between the US and other Latin American countries after NAFTA went into effect, the bigger picture about the general trends of trade can be seen, making it clearer whether or not Mexico would have experienced the same growth of trade with the US in the absence of NAFTA.

      Looking at US trade with ten Latin American countries (data for which can be seen in the attached chart) between the years of 1990 and 2015 provides insight to the trends of trade over the years. One of the main arguments in support of NAFTA is that it has helped facilitate positive trade growth between the US and Mexico. However, there is the possibility that this growth would have occurred even without NAFTA. Looking at the difference in US trade with these countries from 1990 to 2015, every single country has experienced a growth in trade, and the only one that has exhibited a significant downward trend in recent years is Venezuela.

      Some may argue that these numbers are not comparable with the numbers for US trade with Mexico because the US does so much more trading with Mexico than any other Latin American country. The exports for Mexico were $207,925 million higher in 2015 than in 1990, whereas the exports for all ten of the other Latin American countries combined were only $89,726.7 million higher in 2015 than in 1990. While this would suggest that Mexico did indeed experience trade growth that was significantly greater than other Latin American countries during the same time, this is not necessarily the case. Looking at the attached table, it is clear that the US traded significantly more with Mexico than another country before NAFTA came into effect, with $28,279 million in exports and $30,156.8 million in imports in 1990. In 2015, there were $236,204 million in exports and $296,401.2 million in imports. This means that the number of exports in 2015 was 8.3 times higher than in 1990 and the number of imports was 9.3 times higher. On average (of the ten countries sampled) exports for these countries were 7.3 times higher in 2015 than in 1990 (US Census Bureau Foreign Trade Division). So while the numerical value of US trade with Mexico has been significantly higher than trade with any other Latin American country, looking at amount of exports each country had in 2015 proportionate to their exports in 1990 shows that these Latin American countries have experienced a trade growthcomparable to that of Mexico’s. This proves that it’s quite plausible that growth in trade between US and Mexico would have occurred even in the absence of NAFTA.

      While the data does show growth in US trade with Mexico since the establishment of NAFTA, the data also shows similar growth in US trade with many other Latin American countries in the same time period, despite the fact that these countries were not directly impacted by the agreement. What this suggests is that this kind of growth has more to do with general development, and that trade between Mexico and the US would have made significant growth throughout these years anyway, especially considering the fact that US trade with Mexico was so much greater than US trade with other Latin American countries before NAFTA.

      While it is true that NAFTA has had positive effects on trade between the US and Mexico, it’s also true that both countries have found faults in the effect of the agreement domestically. The question remains whether NAFTA and the elimination of trade barriers were necessary to achieve the goal of promoting trade and investment between the US, Mexico, and Canada and whether or not the agreement is still beneficial and worth continuing. Based on this data from the United States Census Bureau and the trend in Latin American trade growth, the argument could be made that trade between Mexico and the United States would have experienced a similar growth in the absence of NAFTA, without the negative consequences both countries have experienced. While there are numerous other factors that must be analyzed to create a more complete picture about the effects and success of NAFTA, this data serves to addresses the issue from a broader perspective, potentially providing new insight.

      Written by Kiersten Maule. Kiersten is currently a sophomore, double majoring in Spanish and Political Science, with a minor in sociology, and pursuing a certificate in Latin American Studies. After graduation, Kiersten plans on attending law school to pursue a career in family law.


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