Three reasons Canada & U.S. should keep NAFTA
The results of the U.S. elections have raised concerns over the survival of the North American Free Trade Agreement (NAFTA). Before proceeding, it is important to point out that NAFTA covers the largest free trade area in the world, impacts 450 million people, and the member economies generate an overwhelming $20.8 trillion per year.
Here are three major reasons why Canada and the United States of America should keep NAFTA.
Eliminates Tariffs
NAFTA increased the trade conducted between Mexico, United States, and Canada. The growth of trade between these three member countries is as a result of the elimination of tariffs. According to a recent report posted online, trade increased by $1.14 trillion in 2015. This is clear proof that eliminating tariffs can help promote the growth and economies of the three countries.
Reduced Prices of Commodities
When NAFTA was signed and implemented, the cost of importing Mexican oil was significantly reduced. This in turn reduced the cost of gas in the United States as well as reduced our reliance on oil supplies from the Middle East. The ripple effects of low gas prices allowed for affordable food products and reduced grocery bills.
Increase in Economic Output
NAFTA has significantly helped boost the economy of the United States by up to 5% per year. Some of the industries that have benefited the most from this trade agreement are the automotive, agriculture, health care, and financial services sectors. Four years after implementation of the agreement, the manufacturing companies managed to create over 800,000 jobs.
Clearly, it is important for Canada and U.S. to retain this trade agreement to promote the growth of their economies as well the livelihoods of their citizens.