NAFTA passed, now what?

Modern Machine Shop, March, 1994 by G. Chris Koepfer

Well, we can finally wrap-up NAFTA. It's a fait accompli, done deal, history, put this baby to bed, right? Well, actually no. The bill passed, true. But before charging off in search of a golden sombrero understand NAFTA is actually 15 years from being reality. It's a phased-in program. So it will take those 15 years for all of the current tariffs--on both sides of the Rio Grande--to go away. It's true many trade constraints disappeared on January 1, but not all. So for the free in the North American Free Trade agreement, we'll just have to wait.

This phase-in thing is just one of several points in the agreement one should be aware of before betting the ranchero on a venture in Mexico.

For example, NAFTA is voluntary. If a company does not wish to take the tariff reductions agreed to in NAFTA, it can bypass the agreement's requirements. One of those requirements being a declaration of North American content in products traded among the three participants. Automobiles for example, must have 62.5 percent North American content to apply for NAFTA tariff wavers. Why 62.5? Who knows? Other products have similar content mandates.

The beginning of open trade among the three NAFTA countries is a win-win scenario. For the U.S., passing NAFTA sends a message to the rest of the world acknowledging our belief and willingness to participate in the global economy.

NAFTA's ranks will grow. Already, it appears Chile will announce a desire for inclusion in NAFTA this spring. More are expected to request participation. As the number of participants grows so does the market potential of the block.

Because NAFTA is new, there's a lot of confusion and misinformation going around. And there are many folks hanging out a shingle promising to help decipher the 1800 plus pages of NAFTA rules and regulations.

To avoid spending money to find out information that's probably free, a source for guidance in the NAFTA forest is the U.S. Department of Commerce. They would be a good place to start if business in Mexico is in your future, or if you're just generally interested. The DOC has district and branch offices in many cities. Call (800) USA-TRADE for the office nearest you.