#TBT: NAFTA Enters Into Force

     Old Democrats and New Democrats, for all their differences, have had at least one thing in common: seeking to reduce tariffs and bolster free trade. Grover Cleveland reduced tariffs. Woodrow Wilson reduced tariffs by more than 40 percent and transitioned federal income to direct taxation on wealthy individuals. While unsuccessful, President Obama proposed a Trans-Pacific Partnership, and he did manage to open free trade with South Korea and Colombia in 2011. President Biden has already sought to reduce tariff rates in Southeast Asia to compete with China. Perhaps the most notable example of this comes from President Clinton, who, aside from signing over 300 trade agreements with nations, secured the passage of NAFTA, the North American Free Trade Agreement.

     NAFTA actually originated in 1988, when President Reagan passed a United States-Canada Free Trade Agreement. In 1992, President Bush secured a skeletal agreement, but it faced stiff opposition in Canada and the United States. President Clinton was left to negotiate the North American Agreements on Labor and Environmental Cooperation for NAFTA to pass in both (and, ultimately, all three) countries. Free trade in North America went into effect on January 1st, 1994, 30 years ago today. As a result of NAFTA, intra-bloc trade increased by 41 percent in the United States, 11 percent in Canada, and 118 percent in Mexico. This supported hundreds of billions of dollars in revenue and strengthened relations among the U.S., Canada, and Mexico while generally averting the massive losses predicted by critics.

     NAFTA officially ended on July 1st, 2020. Negotiations to replace it began in 2017, were completed in September 2018, were ratified in April 2020, and went into effect that July. The new USMCA (U.S.-Mexico-Canada Agreement) made only small changes in the realms of manufacturing and agriculture, earning it the nickname "NAFTA 2.0" or "New NAFTA."