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Why NAFTA Works Amazing

Polipace Staff

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NAFTA created the world’s largest free trade area of 450 million people. It’s an economic powerhouse of $20.08 trillion, as measured by gross domestic product. It links the economies of the United States ($18.5 trillion), Canada ($1.67 trillion), and Mexico ($2.3 trillion). NAFTA’s trade area is greater than the economic output of the 28 countries in the entire European Union.

1. Quadrupled Trade
Between 1993-2017, trade between the three members quadrupled from $297 billion to $1.17 trillion. That boosted economic growth, profits, and jobs for all three countries. It also lowered prices for consumers.

During that time, the United States increased its exports of goods to the other two from $142 billion to $525 billion. That’s a third of its total exports. Canada ($282 billion) and Mexico ($243 billion) were the top two U.S. export markets in 2017. Imports from Canada ($300 billion) and Mexico ($314 billion) increased from $151 billion in 1993 to $614 billion. That’s 26 percent of total U.S. goods imports.

NAFTA boosted trade by eliminating all tariffs between the three countries. It also created agreements on international rights for business investors. That reduced the cost of commerce. It also spurs investment and growth, especially for small businesses.

2. Lowered Prices
Lower tariffs also reduced import prices. That also lessened the risk of inflation and allowed the Federal Reserve to keep interest rates low.

That’s especially important for oil prices since America’s largest import is oil. The U.S. imported $144.2 billion in oil from Mexico and Canada. Thanks to greater U.S. shale oil production, this figure was down from $157.8 billion in 2007. NAFTA reduced U.S. reliance on oil imports from the Middle East and Venezuela. It was especially important when the U.S. banned oil imports from Iran. Why? Mexico and Canada are friendly countries. Other oil exporters, such as Venezuela and Iran, use oil as a political chess piece.

For example, both started selling oil in currencies other than the petrodollar.

NAFTA lowered food prices in much the same way. Food imports totaled $39.4 billion in 2013, up from $28.9 billion in 2009. It lowered the prices of fresh vegetables, chocolate, fruit (except bananas), and beef.

3. Increased Economic Growth
NAFTA boosted U.S. economic growth by as much as 0.5 percent a year. The sectors that benefited the most were agriculture, automobiles, and services.

U.S. farm exports to Canada and Mexico grew 156 percent. That’s compared to a 65 percent increase in farm exports to the rest of the world. Farm exports to Canada and Mexico alone were greater than exports to the next six largest markets combined. Total farm exports were $39.4 billion in 2015.

NAFTA increased farm exports because it eliminated high Mexican tariffs. Mexico is the top export destination for U.S. beef, rice, soybean meal, corn sweeteners, apples, and beans. It is the second largest export destination for corn, soybeans, and oils.

NAFTA modernized the U.S. auto industry by consolidating manufacturing and driving down costs. Most cars made in North America now have parts sourced from all three countries. The increase in competitiveness allows the industry to fend off Japanese imports. Mexico exports more cars to the United States than Japan. Before the 2008 recession, Japan exported twice as many as Mexico. By 2020, Mexico will manufacture 25 percent of all North American cars.

NAFTA boosted U.S. service exports to Canada and Mexico from $25 billion in 1993 to a peak of $106.8 billion in 2007. The recession hit financial services hard, so services haven’t quite recovered. By 2009, they had only risen to $63.5 billion. By 2012, service exports had improved to $88.6 billion.

More than 40 percent of U.S. GDP is services, such as financial services and healthcare. NAFTA eliminates trade barriers in most service sectors, which are regulated. NAFTA requires governments to publish all regulations, lowering hidden costs of doing business.

4. Created Jobs
NAFTA exports created five million new U.S. jobs. Most of those jobs went to 17 states, but all states saw some increases. U.S. manufacturers added more than 800,000 jobs between 1993 and 1997. That’s because manufacturers exported $487 billion in 2014. It generated $40,000 in export revenue for each factory worker.

Even imports from NAFTA partners created jobs. That’s because nearly 40 percent of U.S. imports from Mexico originated with American companies. They designed the products domestically, then outsourced some portion of the process in Mexico. Without NAFTA, they would have gone to China. They may not have been created at all. (Source: “NAFTA, 20 Years Later,” Knowledge@Wharton, February 19, 2014.)

5. Increased Foreign Direct Investment
Since NAFTA was enacted, U.S. foreign direct investment in Canada and Mexico has more than tripled. It reached $452 billion by 2012 (latest statistics available). That boosted profits for U.S. businesses by giving them more opportunities to develop, and markets to explore.

Canadian and Mexican FDI in the United States grew to $240.2 billion, up from $219.2 billion in 2007. That’s additional investment went mostly to U.S. manufacturing, insurance, and banking companies.

NAFTA protected intellectual properties. It helped innovative businesses by discouraging pirating. It boosted FDI because companies know that international law will safeguard their rights. NAFTA reduced investors’ risk by guaranteeing they will have the same legal rights as local investors. Through NAFTA, investors can make legal claims against the government if it nationalizes their industry or takes their property by eminent domain.

6. Reduced Government Spending
NAFTA allowed firms in member countries to bid on all government contracts. That created a level-playing field for all companies within the agreement’s borders. It cut government budget deficits by allowing more competition and lower-cost bids. (Source: “Quantification of NAFTA Benefits,” USTR. “NAFTA Triumphant: Assessing Two Decades of Gains,” U.S. Chamber of Commerce, October 27, 2015. “NAFTA Section Index,” USTR.)

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Business

Get a Degree In Marijuana Studies

Polipace Staff

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As marijuana becomes legal in more and more states, college and universities across America are figuring out ways to help prepare people for the blossoming cannabis industry. And now one school in New Jersey will finally let you study weed.

Stockton College in New Jersey recently launched a new cannabis studies minor. It is the first program of its kind in New Jersey, and one of the few colleges in the United States offering actual studies on marijuana. The program is a mix of learning the science behind growing and cultivating marijuana as well as examining the changing legal landscape of the drug. Around 30 students are currently enrolled in the minor.

Because of climate and security concerns, as well as consistency, the state’s licensed medical facilities grow their crops indoors under artificial light. Every variable can have an impact on the final product — from the intensity of light to the soil to the humidity and temperature and more.

It’s no surprise that New Jersey would be one of the first states to jump on this trend. Last year the state elected Democrat Phil Murphy, a pro-marijuana legalization candidate, as governor, and multiple state legislators say that a vote on recreational cannabis is coming in the very near future.

The university hopes the new minor will help prepare students to enter the cannabis industry which will hopefully become legal in the state in the near future.

“All of our graduates are going to be qualified to be analysts in a lab setting,” Brandon Canfield, the associate professor of analytical chemistry who started the program, tells CNBC Make It. That could lead to a position that pays $70,000 right out of school, he adds.

There are a couple specific tracks offered within the major. One has a bio-analytical focus. Those students could go on to graduate programs, says Canfield, and they will be strong job candidates because they will have completed an independent study.

The other track is for aspiring entrepreneurs. For those students, it’s not clear what the future might hold. To offer an example of what they could do, Canfield suggests they might open a growing operation with a lab in-house.

Study has been limited in the United States, where marijuana remains listed as a Schedule I drug, the designation for the most dangerous controlled substances.

Some people are arguing that the minor will encourage students to use marijuana. But if it’s an industry that’s going to be create a lot of jobs in the near future, why wouldn’t you want people prepared to get those positions?

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Cannabis Stocks High On Sessions’ Removal

Polipace Staff

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Cannabis stocks made major gains after Sessions’ resignation. Canopy Growth and Aurora Cannabis stocks both rose by eight percent, ETFMG Alternative Harvest ETF increased six percent and the most impressive gain was by Tilray that went up a substantial 30 percent within the first day.

Obviously, Sessions resigning as Attorney General was a major factor, considering his desire to crack down on the legal cannabis industry. But obviously the success of the recreational ballot initiative in Michigan and the medical marijuana initiatives in Missouri and Utah also contributed to these stock increases. And Democrats took control of the House of Representatives, another move expected to yield positive results for the cannabis industry.

Of course, it’s sort of weird that all of these companies saw their stocks increased because even though they are traded on the U.S. stock exchange, they’re all Canadian-based companies. So presumably, these latest developments won’t really increase their own bottom-lines or profits unless they decide to begin U.S. based operations.

Aurora Cannabis (ACB) said this week it had grabbed nearly a third of online recreational sales in Ontario, Canada’s most populous province, offering an early look at which big pot producers are emerging as leaders in a nascent business still marred by shortages.

But as Canada’s stores try to keep their shelves stocked amid a wave of recreational demand, Aurora warned the shortages would likely continue. Management said that even as they try to crank production higher, there wasn’t much they could to immediately address the thinly-stocked shelves at dispensaries.

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Business

Stan Lee Has Died.

Polipace Staff

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Stan Lee, the creator Marvel Comics, has died at 95.

According to TMZ, Lee was transported from his Hollywood Hills home Monday morning and was taken to the hospital where he later died.

Lee started Marvel Comics with Jack Kirby back in 1961. He started off with The Fantastic Four and went on to create Spider Man, Black Panther, X-Men, The Incredible Hulk, and more.

He is survived by his daughter, Joan.

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