International Business Essay Example | Topics and Well Written Essays - 1000 words - 4

International Business - Essay Example who pointed to the small current-trade between Canada and Mexico, Mexican competition with Canadian goods in US markets and the supposed failure of the then existing Canadian-US trade agreement. Today, after sixteen years does the Canadian experience confirm the fears of the critics or did NAFTA live up to the expectations? For Canada, the NAFTA is an improvement on its previous trade agreement with the United States – the Canada-US Free Trade Agreement (CUFTA) - in a number of respects. Canada now has an extension of duty drawbacks and greater discipline over standards, which should reduce border conflicts with the US. I would like to underscore, as well that the best part of the agreement in my opinion is that Canada, along with the US and Mexico have the same low or zero most favored nation tariff on imports such as computers. This old custom union model has huge advantages because rules of origin are not required for trade in that product within the union. In addition, Canada also reaps some benefits in the area of agriculture. Between 1991 and 2002, Canadian exports absorbed by the United States rose from 39 to 67 percent. (Volrath 2004) The Canadian oil is also gobbled up exclusively by the United States along with its underlying strategic political mileage for the country. On the economic side, investments also poured in, particularly those from foreign companies who want to access the NAFTA market. In a way, this fact provides an argument against those NAFTA critics who argue that investment is lost to Mexico due to cheap labor. As it is, there are countries and firms who prefer Canada over Mexico because the country’s labor pool is skilled and educated; and over the US, because of the appeal of lower costs and a moderate tax regime. This is underscored by the tremendous rise in the foreign direct investment in the country. Annual figures during the first seven years of NAFTA reflected an average of $21.4 billion investment s for the country, almost