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NAFTAThe North American Free Trade Agreement1310403
Independent University, BangladeshSection: 02Course Code: INB 301NameIDGazi Md. Sahadate Hossaine1310403Mohammed Iqbal Hossain1110422S.M.Ahsan Habib1310593Mohammad Hasanul Banna1220586Kazi Md.Tanvir1310468Syed Amir Hamza1331001Tania Nazreen1321175Submitted toDate of SubmissionMs. Sumita DasDecember 02, 2015Senior Lecturer, School of BusinessIndependent University, Bangladesh (IUB)1 | P a g eReport on| NAFTA
2 | P a g eReport on| NAFTA
IntroductionMore than 20 years have passed since January 1, 1994, when the North American Free Trade Agreement (NAFTA)was first implemented. On that date, NAFTA’s member countries—Canada, Mexico, and the United States—starteda 14-year process in which they gradually removed thousands of barriers to intraregional trade, including allagricultural products traded between Mexico and the United States and nearly all agricultural products tradedbetween Canada and the United States and between Canada and Mexico. Canada and the United States already hadstarted to implement bilateral trade liberalization in 1989 as part of the Canada-U.S. Free Trade Agreement(CUSTA), which was then subsumed by NAFTA, so the year 2014 may be thought of as both the 20thanniversary ofNAFTA and the 25thanniversary of CUSTA.NAFTA has had a substantial impact on the integration of NorthAmerica’s agricultural markets.Market integration is the extent to which one or more formerly separated markets have combined to form a singlemarket. Integration is visible in increased cross-border flows of goods, services, capital, and labor. Trade in goodsconsists of not only final consumer products but also intermediate inputs and raw materials, as firms reorganize theiractivities around regional markets for both inputs and outputs, spurred in part by greater foreign direct investment(FDI).In addition, decision-makers in both the government and the private sector continue to pursue a course ofgreater institutional and policy cooperation and coordination to encourage further market integration. Integration ofNorth America’s agricultural markets, as fostered by NAFTA, offers many tangible benefits. In general, it enablesagricultural producers and consumers in the region to benefit more fully from their relative strengths and to respondmore efficiently to changing economic conditions. For producers, it opens new territories for the sale of their output,possibly allowing for the further exploitation of economies of scale; however, it also opens the door to newcompetition from producers in locations that were formerly isolated by tariff and quota barriers. In addition, thecreation of a larger, single market gives producers access to potentially cheaper suppliers of inputs and creates newopportunities for FDI, as firms restructure their vertical and horizontal arrangements.