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  3. What You Need to know about North American Free Trade Agreement (NAFTA)

What You Need to know about North American Free Trade Agreement (NAFTA)

Posted by Carlos Calderon on June 21, 2018

Carlos Calderon Carlos Calderon

Drafted in 1992, the NAFTA document was designed to define the rules of commerce between Mexico, Canada and the United States. The main objectives were eliminating trade barriers, promoting conditions for fair competition, and increasing investment opportunities. Since NAFTA’s effective date in 1994, the increase of commerce between the three countries has boosted the economies of each nation while reducing prices for consumers; creating a free-trade zone.

For Mexico, imports, exports and foreign direct investment has been considerably enhanced during these years with the exception of the country’s agricultural sector which has not been able to compete against US imports. With this sector, costs increased as nitrogen fertilizer imports caused unintended pollution and higher costs.

During the 2016 US presidential campaign, candidate Donald Trump indicated his opposition to the free trade agreement, making this a hotbed topic for review once president. As such, President Trump and US Trade Representative Robert Lighthizer began renegotiation of NAFTA on August 16, 2017 with the expectation of a completed review by the end of that year. As that deadline came and went, the three countries are now on their 8th round of renegotiation. Stakeholders are hopeful that the talks will be complete by July 2018.

The main points under revision include:

  • Automotive commerce, rules of origin
  • The “Sunset” clause
  • Agricultural temporality
  • Tariffs on metals

With Mexico holding its presidential election in July and the US holding mid-term elections in November, parties are working to expedite the decision-making process in advance of these dates.

Our team is always ready to help.

Please contact us for more information.

Carlos Calderon

Carlos Calderon

Manager, International Consulting

Contact Carlos   |   Read Carlos's bio

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What You Need to know about North American Free Trade Agreement (NAFTA)

Posted by Carlos Calderon on June 21, 2018

Carlos Calderon

Drafted in 1992, the NAFTA document was designed to define the rules of commerce between Mexico, Canada and the United States. The main objectives were eliminating trade barriers, promoting conditions for fair competition, and increasing investment opportunities. Since NAFTA’s effective date in 1994, the increase of commerce between the three countries has boosted the economies of each nation while reducing prices for consumers; creating a free-trade zone.

For Mexico, imports, exports and foreign direct investment has been considerably enhanced during these years with the exception of the country’s agricultural sector which has not been able to compete against US imports. With this sector, costs increased as nitrogen fertilizer imports caused unintended pollution and higher costs.

During the 2016 US presidential campaign, candidate Donald Trump indicated his opposition to the free trade agreement, making this a hotbed topic for review once president. As such, President Trump and US Trade Representative Robert Lighthizer began renegotiation of NAFTA on August 16, 2017 with the expectation of a completed review by the end of that year. As that deadline came and went, the three countries are now on their 8th round of renegotiation. Stakeholders are hopeful that the talks will be complete by July 2018.

The main points under revision include:

  • Automotive commerce, rules of origin
  • The “Sunset” clause
  • Agricultural temporality
  • Tariffs on metals

With Mexico holding its presidential election in July and the US holding mid-term elections in November, parties are working to expedite the decision-making process in advance of these dates.

Our team is always ready to help.

Please contact us for more information.

Carlos Calderon

Manager, International Consulting

Contact Carlos   |   Read Carlos's bio

related news

How to Calculate R&D Tax Credits

As we’ve seen in the first two installments of this series, business owners often miss out on the R&D tax credit opportunity and the bottom-line infusion it can provide. Many…

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Doing Business in Mexico: What to Expect this Year

Without a doubt, this year will be interesting for Mexico. To start, it’s an election year and we all know what that means…a lot of uncertainty. As the global pandemic…

Read full story

What Expenses Qualify for R&D Tax Credits?

The R&D tax credit is one of the most overlooked opportunities to boost your bottom line. Many business owners fail to claim it under the mistaken belief that they’re not…

Read full story

Clayton & McKervey Launches The Sound of Automation Podcast

Media Contact: Denise Asker, dasker@claytonmckervey.com; 248.936.9488 Southfield, Mich.—February 17, 2021—Clayton & McKervey, a certified public accounting and business advisory firm helping growth-driven companies compete in the global marketplace, is excited…

Read full story

Misconceptions About the Research & Experimentation Tax Credit

As companies put more emphasis on Industry 4.0 and business processes become more automated and accessible, the opportunities for Research & Experimentation tax credits increase. The Research and Experimentation (R&E)…

Read full story

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