Question

What was the purpose of NAFTA?

Answer 1

Hint: On January 1, 1994, Prime Minister Brian Mulroney, Mexican President Carlos Salinas, and US President George H.W. Bush signed the North American Free Trade Agreement (NAFTA).

Complete answer:
The North American Free Trade Agreement (NAFTA) was established to facilitate trade among the United States, Canada, and Mexico. The aim was to lower the cost of doing business in Mexico and Canada for US businesses (and vice versa) by reducing the amount of red tape involved in importing and exporting products. NAFTA lowered or removed tariffs on imports and exports between the three signatory countries, resulting in the creation of a massive free-trade zone.

Two NAFTA side agreements aimed to create high common standards in worker safety, human rights, and environmental protection in order to discourage firms from relocating to other countries in order to take advantage of lower wages and less regulations. The aim of NAFTA was to promote trade between North America's three major economic powers: Canada, the United States, and Mexico. The agreement's supporters argued that it would favour the three countries involved by encouraging freer trade and lower tariffs between Canada, Mexico, and the United States.

NAFTA's immediate goal was to boost cross-border trade in North America, and it succeeded in doing so by lowering or removing tariffs between its three member countries. It benefited small and mid-size companies in particular because it reduced costs and eliminated the need for a corporation to have a physical presence in a foreign country in order to do business there.

Note: Increased trade, economic output, foreign investment, and lower consumer prices are only a few of the benefits of NAFTA. As domestic factories moved to lower-wage Mexico, salaries in U.S. manufacturing plants were also suppressed, resulting in the loss of employment in the United States.