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  • June 2018 (Revised January 2020)
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Renegotiating NAFTA

By: Laura Alfaro, Haviland Sheldahl-Thomason and Sarah Jeong
  • Format:Print
  • | Language:English
  • | Pages:40
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Abstract

January 1, 2019 marked the 25th anniversary of the North American Free Trade Agreement (NAFTA). Twenty-five years after the landmark trade pact was signed by the United States, Canada, and Mexico, considerable debate surrounded it. Trade and trade agreements were a focal point of the 2016 U.S. presidential election. NAFTA came into effect on January 1, 1994, after being backed by the Republican administration of U.S. President George H. W. Bush and the Democratic administration of U.S. President Bill Clinton during its implementation. It created the largest free trade area in the world at the time. Since implementation, total trade between NAFTA countries grew 280%; in comparison while trade to non-NAFTA partners grew by 195%. Critics of NAFTA claimed that it had contributed to a loss of manufacturing jobs to Mexico, increased inequality in all countries, and undercut environmental laws. Those who supported NAFTA, however, noted that in addition to trade, output, and overall employment, investment among the three nations increased, and productivity also grew. Furthermore, the agreement led to lower prices. By 2018, all countries experienced low unemployment rates. With changes in NAFTA looming, many questioned whether the accord had brought more benefits than costs to its signatories. Could the costs be minimized under a new agreement without reducing the benefits? Did buying local goods help create the most jobs in a country? What was the role of business? Everyone wondered about the potential ramifications of the new NAFTA.

Keywords

Trade; Negotiation; Agreements and Arrangements; Cost vs Benefits; Auto Industry; United States; Mexico; Canada

Citation

Alfaro, Laura, Haviland Sheldahl-Thomason, and Sarah Jeong. "Renegotiating NAFTA." Harvard Business School Case 318-143, June 2018. (Revised January 2020.)
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About The Author

Laura Alfaro

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Related Work

    • February 2019 (Revised January 2020)
    • Faculty Research

    Renegotiating NAFTA

    By: Laura Alfaro and Sarah Jeong
    • June 2018 (Revised January 2020)
    • Faculty Research

    Renegotiating NAFTA

    By: Laura Alfaro, Haviland Sheldahl-Thomason and Sarah Jeong
Related Work
  • Renegotiating NAFTA By: Laura Alfaro and Sarah Jeong
  • Renegotiating NAFTA By: Laura Alfaro, Haviland Sheldahl-Thomason and Sarah Jeong
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