News-Sentinel.com

Thursday, 03/18/1999

NAFTA

NAFTA TERMS

What is NAFTA?

The North American Free Trade Agreement was implemented in 1994 by Mexico, Canada and the United States. It extended the earlier treaty between Canada and United States to relax trade barriers among all three nations. The treaty aims to create a level playing field, with the same tariffs, regulations and rules governing business in and among the three nations. A critical second phase begins in 2001 when businesses will lose many of the duty relief advantages.

What is GATT?

The General Agreement on Trade and Tariffs is the world's largest treaty governing trade. Since its establishment in 1947, the agreement has been modified several times, most recently during the Uruguay round of talks in 1993. Most of the world's major trading nations are members. GATT sets parameters for tariffs, with the World Trade Organization empowered to penalize nations violating those rules.

What is a maquiladora?

Maquiladora zones were created by Mexico in 1965 to spur investment. The zones along the U.S.-Mexico border allowed companies in the maquiladora industrial parks to ship goods duty-free in and out of Mexico, which at that time had punitive tariffs. The mostly light assembly plants typically assemble components made in other nations into finished goods. The first maquiladoras were established by American companies. European and Asian companies have built maquiladora plants. Some benefits phase out in 2001.

What is the Rio Grande Valley?

The border area between the Gulf of Mexico and the McAllen, Texas—Reynosa, Mexico, metroplex is referred to as the valley or the Rio Grande Valley. It is the southernmost part of Texas, almost the same latitude as Miami. The region is one of the poorest areas in the United States, and one of the fastest growing. It is making a transition from agriculture to manufacturing, distribution and services.