Economic integration in NAFTA. Achievements and problems

The North American Free Trade Agreement or NAFTA is an agreement signed by the governments of Canada, Mexico, and the United States, creating a trilateral trade bloc in North America. The agreement came into force on January 1, 1994. It superseded the Canada – United States Free Trade Agreement between the U.S. and Canada. In terms of combined GDP of its members, as of 2010 the trade bloc is the largest in the world.

The North American Free Trade Agreement (NAFTA) has two supplements, the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC).

Following diplomatic negotiations dating back to 1986 among the three nations, the leaders met in San Antonio, Texas, on December 17, 1992, to sign NAFTA.The agreement then needed to be ratified by each nation's legislative or parliamentary branch.

The proposed Canada-U.S. trade agreement had been extremely controversial and divisive in Canada, and the 1988 Canadian election was fought almost exclusively on that issue. In that election more Canadians voted for anti-free trade parties (the Liberals and the New Democrats) but more seats in parliament were won by the pro-free trade Progressive Conservatives (PCs). Mulroney and the PCs had a parliamentary majority and were able to easily pass the Canada-U.S. FTA and NAFTA bills. However, Mulroney himself had become deeply unpopular and resigned on June 25, 1993. He was replaced as Conservative leader and prime minister by Kim Campbell, who then led the PC party in to the 1993 election where they were decimated by the Liberal party under Jean Chrétien. Chrétien had campaigned on a promise to renegotiate or abrogate NAFTA but instead negotiated the two supplemental agreements with the new U.S. president. In the U.S., Bush, who had worked to "fast track" the signing prior to the end of his term, ran out of time and had to pass the required ratification and signing into law to incoming president Bill Clinton. Prior to sending it to the United States Senate, Clinton introduced clauses to protect American workers and allay the concerns of many House members. It also required U.S. partners to adhere to environmental practices and regulations similar to its own. The ability to enforce these clauses, especially with Mexico, and with much consideration and emotional discussion the House of Representatives approved NAFTA on November 17, 1993, by a vote of 234 to 200. The agreement's supporters included 132 Republicans and 102 Democrats. NAFTA passed the Senate 61-38. Senate supporters were 34 Republicans and 27 Democrats. Clinton signed it into law on December 8, 1993; it went into effect on January 1, 1994.

Pros

Proponents support U.S. free trade agreements because they believe that:

• Free trade increases sales and profits for U.S. businesses, thus strenghtening the economy

• Free trade creates U.S. middle-class jobs over the longterm

• Free trade is an opportunity for the U.S. to provide financial help to some of the world's poorest countries

Cons

Opponents of U.S. free trade agreements believe that:

• Free trade has caused more U.S. jobs losses than gains, especially for higher-wage jobs.

• Many free trade agreements are bad deals for the U.S

40.Transnational corporations (TNCs). Causes of their emergence & effects for international economy. The Transnationality Index (TNI).

TNCs

Transnational corporations -- those corporations which operate in more than one country or nation at a time -- have become some of the most powerful economic and political entities in the world today.

Transnational Corporations exert a great deal of power in the globalized world economy. Many corporations are richer and more powerful than the states that seek to regulate them. Through mergers and acquisitions corporations have been growing very rapidly and some of the largest TNCs now have annual profits exceeding the GDPs of many low and medium income countries. This page explores how TNCs dominate the global economy and exert their influence over global policymaking.

TNI

• The Transnationality Index offers a method to empirically analyze these conflicting predictions of the dynamics of internationalization.

• Similarly, the Transnationality Index may be used to evaluate the many theories of comparative performance associated with researchers who show preference for a particular organizational form over another under certain market conditions.

• Transnationality Index also provides researchers of organizational strategy with a measure of competitive scope, defined as “the breadth of activities the firm performs in competing in an industry”

The Transnationality Index (TNI) is a means of ranking multinational corporations that is employed by economists and politicians. It is calculated as the arithmetic mean of the following three ratios (where "foreign" means outside of the corporation's home country):

• the ratio of foreign assets to total assets

• the ratio of foreign sales to total sales

• the ratio of foreign employment to total employment