How NAFTA Affects Cross-Border Trade In North America

Textile and cross-border trucking are the industries that are most affected by the North American Free Trade Agreement. Tariffs and other barriers to commerce among the North American countries, USA, Canada, and Mexico will be lifted by NAFTA. In the transportation category, NAFTA will remove the restrictions that prevent the US and Mexican truckers from carrying cargoes across the borders.

There would be a 1 to 3-year period of harmonization of the safety and regulatory standards after which motor carriers from the USA will gradually have better access into Mexico including an easing of investment restrictions. After a 10-year phase-in period, trucking providers in the United States will be allowed to fully own a Mexican carrier that can be used for international commerce. Mexico will allow US ship lines to run private terminals with custom brokerage, stevedoring, and warehousing systems.

The agreements involving textiles and apparel have been met with criticism from unions. There were also mixed reviews from American manufacturers of apparel because they are afraid that cheap labour from the south of the border will hurt them. Mexico might be used as a means for producers in Asia and other countries to circumvent quotas set by the US. Under NAFTA, both Canada and Mexico are allowed to ship a specific amount of clothing and textiles to the US every year that are produced from foreign materials.

All the 3 North American countries will eliminate any prohibitions and quantitative restrictions that are applied at the borders like quotas and import licenses. However, each of the countries can still impose border restrictions based on limited circumstances that may include health and environmental reasons.

Barriers to the trade of North American automobiles, trucks, buses, and parts will be removed within the free trade zone. Investment restrictions on the sector will also be removed within the 10-year transition period. However, automotive goods trade between the USA and Canada remains duty-free.

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