How NAFTA Benefits Trade Among 3 Country Members of the Agreement
NAFTA is a trade organization that stands for North America Free Trade Agreement that was formed to facilitate trade operation within the region. The member countries of NAFTA include; the United States, Mexico, and Canada. Since the formation of NAFTA, the economic relations amongst those three countries have developed. NAFTA created the greatest and largest free trade region that serves more than 450 million people within its borders. According to the Gross Domestic Product report, NAFTA created a powerful economic powerhouse of $20.08 trillion to boost the economic relations. This paper delves on how to understand NAFTA in depth as a powerful economic organization.
For NAFTA to be successful in its operations, one of the questions we can ask is how does NAFTA provide benefit to its members? First, NAFTA has eliminated all tariffs among the three countries since January 2008. By that measure, inflation was substantially reduced and hence the cost of importation of products. Secondly, NAFTA research essay assignment has been able to create agreements on investors’ rights internationally. That has motivated investors and reduced cost of trade that has spurred growth due to rising investments in the region.
Thirdly, NAFTA has provided a platform in that member countries can access government contracts. That has created an open market for all companies within the borders and also cuts on government expenditure through allowing healthy competition that leads to lower-cost bids. Fourth, NAFTA protects the intellectual properties of its members. Through such measures, profits have elevated consistently as pirating is discouraged. Foreign direct investment has thrived in all member countries as NAFTA has educated them about their rights and how international law protects them.
Since the formation of NAFTA, members continue to enjoy tremendous benefits. Job opportunities have risen due to high investment and reduction of prices for the main commodities like oil and foodstuffs. Farm product exports have increased, especially in Mexico where America exports a lot of food stuff at a reduced research essay assignment price due to the elimination of export tariffs. That has also made America not to import oil from Iran as Mexico is member country and produces oil at a cheaper importation while strengthening NAFTA agreement.
Rules of Origin of NAFTA
NAFTA operates under strict rules of origin to protect its members. Each NAFTA member country evades tariffs on any good originating from any other NAFTA member. Rules of origin help officials to determine the good eligible for preferential treatment under NAFTA. With the aid of a certificate of origin, officials of NAFTA can distinguish the good that originate from NAFTA members and those from other sources. That contributes to preventing extension of benefits to countries who are not NAFTA members who have their products done little processing in America while their origin is outside NAFTA members.
Through such rules, NAFTA ensures that all goods crossing the member borders originate from NAFTA countries and if not, they are not given preferential treatment. Preferential treatment refers to special treatment given to good originating from NAFTA members such as duty-free importation and reduced exportation prices. That offer is strict to NAFTA members.
Border Zone of NAFTA
During the formation of NAFTA, there was a need to come up with border zones. Border zones dictate areas in that the government restricts them in a particular country. That helps in creating respect and unity amongst trade members as a country cannot violate another country’s rights. Border zone technique has reduced the importation of illegal goods to other countries like drugs and illegal ammunition.
Advantages of a Maquiladora
Maquiladora is a body or a factory that operates under preferential tariff programs administered and established by Mexico and United States. Assembly components, materials and production equipment used in maquiladora are imported to Mexico duty-free. Products fabricated in Mexico can be exported to U.S at a reduced tariff as compared to those from other countries. Maquiladora has helped Mexico both economically and politically. In the early 80’s, Mexico’s economy was poor as compared to the years since the formation of maquiladora. Employment opportunities have raised due to high investment rates in Mexico and availability of market in America and Canada at a lower cost of exportation. Politically, Mexico being a one party country, regions along the border have started changing the trend by advocating a multi-party system of governance due to influence from neighboring American countries. Maquiladora is valuable to businesses and should be spread and adopted by other countries.
How Rules of Origin Affect Goods Crossing Border Under NAFTA
Advanced ruling is legal decisions by Customs of the person concerning particulars of a certain relation to an agreement on the importation and exportation of products.
Preferential Treatment and Procedure Among Member Countries
Generally, preferential treatment is a common term in trade and it refers to a situation where one country is given preference or is favored over others. A member country of NAFTA can only claim for preferential treatment during the importation time. It is normally done on the custom documents normally used by the country that is importing. However, the guidelines for submitting a preferential treatment claim in NAFTA are different in the three countries.
The advanced ruling ensures that all tariff classifications are deemed correct by CBSA. Such a binding is binding Homework Writing Help unless revoked or amended. The advanced ruling creates confidence and certainty to the importer on how products are classified and documented during their clearance at the border.
Before products are exported to a country, commercial samples must be sent in advance. Commercial samples act as prototypes to test the products before a massive importation in case of any rectification on the product; a report is sent pointing out the same. Under NAFTA, commercial samples are imported duty-free, either individually or group shipment, the cost does not exceed US $1 depending on the currency and the condition of the samples.
Tariff shift rule is a rule that only applies to goods that do not originate from NAFTA countries. For such goods, they are required to abide by this rule to access preferential treatment as required by NAFTA rules of origin. That rule has assisted many traders who are non-members of NAFTA to access trade benefits from NAFTA as the three member countries.
De Minimis Rule
De Minimis Rule provides additional possibilities of qualifying as originating from products that do not meet requirements of a tariff shift. Despite that a product may not undergo the specified tariff shift, such a product may be eligible of originating if the value of the non-originating product that do not undergo the tariff specification do not exceed 7% of the altered value of the good.
Mexico Most Popular Sport and National Sport of Canada
Mexico’s popular game is football followed by boxing. Canada’s popular games are ice hockey and lacrosse.
NOM is a body based in Mexico that its operations involve certification of products imported in and exported outside Mexico. This body ensures that all goods are of the standard for consumption.
All labeling requirements are the same in all the three countries, and that creates uniformity in the NAFTA membership countries according to the rules of origin. NAFTA states that all products should be labeled either on the container or the packaging. Goods are marked in English, Spanish or French depending on their origin either using tags, labels or paints. The labeling must be conspicuous, legible and durable to withstand the distribution and handling conditions.
In conclusion, NAFTA has expanded trade since its formation, and its members have been experiencing trade benefits and protection against exploitations by local and international bodies. Such bodies like NAFTA should be encouraged and adopted in different regions in the globe to enhance growth economically, socially and politically.
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