First of all, a free trade agreement is an agreement where two or more countries are signed, which mutually agree on tariff preferences and reduce non-tariff barriers to trade . Free trade agreements aim at the economic integration of the signatory countries through collective bargaining . These free trade agreements are generally signed indefinitely.
These agreements bring with them economic benefits , because, with the free trade agreement, the country has more facility to interact and be part of the world economy, it increases the competitiveness among the companies of the signatory countries, thanks to the fact that it can be arranged of raw material with lower cost, increases foreign investment , among others. Today we will talk about the North American free trade agreement, this 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 zone, which is made up of 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 the other countries.
On the other hand, NAFTA has objectives that were established from the beginning and, which we will explain below, several of these objectives that it has, which are aimed at an economic benefit.
NAFTA Goals
The objectives of the free trade agreement in North America are mainly with an economic objective and the purpose of better trade for the citizens of these nations, we will mention some of the objectives, such as reducing the exchange costs between the three nations, promoting fair competition among companies of nations, defense of intellectual property, fostering cooperation among nations and creating 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 sanction anti-competitive behavior , one of which is monopolies. They also establish procedures for requesting compensation. 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 have the assurance that intellectual property rights are defended.
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 economies to strengthen in the three nations, and helping a global planning of their companies.
Only the reduction of trade tariffs means a great advantage for nations , having options at better prices than if there were no free trade agreement.
Create conditions that can incentivize investment
In this last point, the signatory nations propose 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 to Mexico, which have a headquarters in the United States, but are part of the domestic product of both nations.
