On 1 January 1948, the General Agreement on Tariffs and Trade came into force with 23 countries. These are the original 15, plus Myanmar, Sri Lanka, Chile, Lebanon, Norway, Pakistan, Southern Rhodesia and Syria. All unilateral trade restrictions have been lifted and the global economy has recovered. NAFTA has had three major advantages. U.S. food prices were lower due to duty-free imports from Mexico. Oil imported from Canada and Mexico has prevented the rise in gas prices. NAFTA has also increased trade and economic growth for all three countries. In principle, free trade at the international level is no different from trade between neighbours, cities or states. However, it allows companies in each country to focus on the production and sale of goods that make the best use of their resources, while others import goods that are scarce or unavailable domesticly.
This mix of local production and foreign trade allows economies to grow faster and, at the same time, better meet the needs of their consumers. While virtually all economists believe that free trade is desirable, they do not agree on the best way to move from tariffs and quotas to free trade. The three fundamental approaches to trade reform are one-sided, multilateral and bilateral. The GSP has three objectives. The first is to lower the price of imports for Americans. This is one of the reasons why inflation has slowed. The success of Wal-Mart and other low-cost distributors depends on duty-free production in these countries. Some of the most important terms of the new agreement related to automotive production. According to the USMCA, 75% of its components would have to be manufactured in North America so that a single car or truck could be exempt from tariffs. According to NAFTA, the requirements were only 62.5%. The agreement also requires that at least 30 per cent of duty-free vehicle work be done by workers earning at least $16 an hour (far more than Mexican workers received). Canada reluctantly made concessions that opened up access to its market for dairy products, but won the preservation of a special trial (Chapter 19) that U.S.
negotiators had attempted to withdraw. Second, NAFTA eliminated many tariffs on imports and exports between the three countries. Tariffs are taxes that are used to increase the cost of foreign goods. NAFTA has developed specific rules to regulate trade in agricultural products, motor vehicles and clothing. Trade unions and environmentalists in rich countries have been the most active in seeking labour and environmental standards. The danger is that the application of such standards could simply be an excuse for protectionist protectionism in rich countries, which would harm workers in poor countries. In fact, people in poor, capitalist or working-class countries were extremely hostile to the imposition of such standards. For example, the 1999 WTO meeting in Seattle was partially unsuccessful because developing countries opposed the Clinton administration`s attempt to include labour standards in multilateral agreements. However, it is unlikely that trade in financial markets is completely free in this day and age. There are many supranational regulatory bodies for global financial markets, including the Basel Committee on Banking Supervision, the International Organization of the Financial Markets Authority (IOSCO) and the Committee on Capital Movements and Invisible Transactions.