North American Free Trade Agreement:

Assessment of Major Issues

GGD-93-137: Published: Sep 9, 1993. Publicly Released: Sep 9, 1993.

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GAO provided an overview of the North American Free Trade Agreement (NAFTA), focusing on the: (1) provisions to liberalize trade and investment in North America; (2) special provisions for trade-sensitive economic sectors; (3) rules to implement the agreement; and (4) potential impacts on the economy, environment, labor, and immigration.

GAO found that: (1) the NAFTA goal is to improve productivity and standards of living by promoting free trade and investment throughout North America; (2) NAFTA removes tariffs and other trade barriers and protects investors from undue governmental interference; (3) NAFTA ratification will create the largest free trade area in the world; (4) although NAFTA eliminates tariff and nontariff barriers in certain trade-sensitive economic sectors including agriculture, automotive, energy, and textiles and apparel, special provisions within the agreement establish trade and investment rules for each sector; (5) NAFTA has established a Commission to facilitate the agreement's implementation, created the highest standards of protection and enforcement for intellectual property, and temporarily restored protection for industries that are affected by imports; (6) the major controversy concerning NAFTA pertains largely to nontrade issues, such as the environment, labor, and immigration; (7) NAFTA is expected to have a positive long-term impact on curbing illegal Mexican migration; (8) although the United States and Canada are expected to have modest macroeconomic growth, Mexico is projected to have the greatest economic growth because of its relatively small and less-developed economy; (9) certain U.S. industries will lose many low-skill jobs and need to restructure their labor force to increase competitiveness and adjust to new market positions; and (10) although long-term U.S. interests are served by promoting and facilitating changes that increase productivity and the standard of living, policymakers need to consider the effects of NAFTA on the U.S. workforce and provide worker adjustment assistance programs for dislocated workers.

Matter for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: Title V of the NAFTA Implementation Act (P.L. 103-182, December 8, 1993) contains Congress' response to the need for a worker adjustment assistance program to facilitate structural adjustments required due to NAFTA's effects on trade and investment. Subtitle A of title V, the NAFTA Worker Security Act, establishes a transitional program for affected workers through amendment of title II of the Trade Act of 1974. This program authorizes, and specifies the terms under which workers may be certified as eligible for, comprehensive assistance including employment services, training, and various allowances. It authorizes up to $30 million per fiscal year for training and authorizes appropriation of such sums as may be necessary to carry out the program for fiscal years 1994-1998. This appears to fully respond to the matter for consideration. The Administration has announced plans to develop a more integrated, comprehensive program of assistance for dislocated workers.

    Matter: If Congress decides to ratify NAFTA, it should also ensure that an effective, well-funded worker adjustment assistance program is in place to facilitate the structural adjustment that may be needed in the workplace.

 

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