First of all, a free trade agreement is an agreement signed by two or more countries, which mutually agree on preferences for tariffs and for reducing non-tariff barriers to trade. Free trade agreements aim at the economic integration of the signatory countries through collective bargaining. In general, these free trade agreements are usually signed indefinitely.
These agreements bring with them economic benefits, due to the fact that, with the free trade agreement, the country has an easier time interacting and being part of the world economy, it increases the competitiveness between the companies of the signatory countries, thanks to the fact that it is possible to have of raw material with lower cost, increases foreign investment, among others. Today we will talk about the North American Free Trade Agreement, showing its objectives.
What is the North American Free Trade Agreement?
By its acronym NAFTA, the North American Free Trade Agreement, is a free trade area, which makes up Canada, the United States and Mexico. It is an extension of the Free Trade Agreement between the United States and Canada, but Mexico was included in 1992. This agreement seeks to reduce costs and promote exchanges of goods between these 3 countries.
This treaty benefits the Mexican economy and helps to face competition from Japan and the European Union, but there are those who say that Canada and Mexico are colonies of the United States, because only the dollar is used between these nations, believing that it is lost. the identity of other countries.
On the other hand, NAFTA has objectives that were raised from the beginning and that we will now explain several of these objectives that it has, which are aimed at an economic benefit.
NAFTA Objectives
The objectives of the free trade agreement in North America are mainly with an economic objective and the end of better trade for the citizens of these nations, we will mention some of the objectives, such as reducing the costs of exchange between the three nations, promoting fair competition between companies of nations, defense of intellectual property, foster cooperation between nations and create conditions that can encourage investment.
Promote fair competition
For this it is prudent to know the concept of fair competition, based on competition laws, which aim to prosecute and punish anti-competitive behavior, one of which is monopolies. They also establish compensation request procedures. All these laws are included in NAFTA, in order to improve the quality of goods and services.
Defense of intellectual property
This treaty also enforces intellectual property rights more flexibly among the three nations. This right is protected by patents and copyrights, ensuring that creativity and innovation flourish. In this way, content creators in the three nations are assured that intellectual property rights are protected.
Foster cooperation among nations
This point serves to facilitate the resolution of problems and the exchange of knowledge between the signatory nations. This benefits the strengthening of the economies in the three nations, and helps global planning of their companies.
Only the reduction of trade tariffs means a great advantage for nations, having options at better prices than if the free trade agreement did not exist.
Create conditions that can encourage investment
On this last point, the signatory nations intend to create conditions to encourage investment, an issue that happens in Mexico, collaborating in the creation of companies. The United States has invested a lot in Mexico thanks to this treaty. Thanks to this, there are products being imported into Mexico, which have a headquarters in the United States, but are part of the gross domestic product of both nations.