NAFTA’s Emerald Anniversary

Twenty years ago, the North American Free Trade Agreement (NAFTA) was finalized and signed into law.  The agreement between the nations of Canada, the U.S., and Mexico, was hotly debated for years prior to signature. Some, like former president Bill Clinton, heralded the agreement as a major step towards increasing the region’s profitability.  Others, however, like Ross Perot—who famously stated that approval of the agreement would lead to a ‘giant sucking sound going south’—had serious reservations.  So, twenty years later, is NAFTA the beacon of economic prosperity promised by Clinton or the absolute failure envisioned by Perot?

Experts are in agreement that NAFTA has produced mainly positive intraregional growth.  To validate their argument they look to the strongest indicator of a country’s economic health: GDP.  From 1993—the year prior to the finalization of NAFTA—to now, the U.S. has enjoyed a 63 percent increase in GDP, with 66 percent and 65 percent increases for Canada and Mexico, respectively . Intraregional trade flows have grown from $290 billion in 1993 to $1.1 trillion in 2012. Today, the United States trades more with Canada and Mexico than with Japan, South Korea, Brazil, Russia, India, and China combined.

Multi-nationals have also benefitted greatly from this relationship.  Private commercial export services to Mexico—excluding military and government services—have grown 163 percent since pre-NAFTA times. Steel exports to Canada from the United States have topped 76 million tons since 2010.  

The Future of NAFTA 
NAFTA remains a hot topic issue in political circles; however, both sides agree that sweeping changes are needed in order to sustain NAFTA’s profitability.  Some of these changes address worker and environmental protections, increased regulatory cooperation, and research projects focused on North American industrial competiveness. While growth has slowed when compared to NAFTA’s first decade, in part due to post-9/11 border restrictions, proponents of the agreement remain confident that NAFTA is vital to the region’s economic success. 

While there will always be political wrestling when it comes to NAFTA, leaving its future uncertain, what is clear is that industry must operate within its current conditions.  With so much import/export volume passing through the region’s land, air, and water, companies need to make sure their valuable products arrive to their customers on time and under budget, regardless of the political climate in Washington.

How Can We Help? 
Allyn International’s 4PL freight management system brings our clients many benefits, including access to a uniform process via our transportation management system, scope and reach from our global operations, and expertise tailored to the local market. Collaborating with Allyn will allow you to leverage your purchasing power and improve your service provider’s performance.  Contact us and we can provide a customized cost-effective solution to meet your company’s needs.  For further information on Allyn International’s services, please contact: sales@allynintl.com 

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