North American Free Trade Agreement

Introduction to the Case

The case associated with North Carolina increasing its import taxes to 25% on foreign-manufactured furniture and textiles calls for the exploration of the North American Free Trade Agreement (NAFTA). The agreement was signed for reducing or completely eliminating the majority of duties, taxes, and other forms of financial trade barriers for ensuring an environment of free trade between the United States, Canada, and Mexico (Cheeseman 89). NAFTA affected the majority of industries and managed the development of blocks that limited the success of trade operations between countries. With this in mind, North Carolina’s tax increase is controversial, with disputes being focused on the constitutionality of the decision overall.

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North Carolina’s Import Tariff: Unconstitutional?

Regardless of the opposing views on the substantial tax increase in North Carolina, it must be mentioned that NAFTA presupposes the existence of a safety measure. A country has the right to reimpose tariffs on imported products in the case if the workers or the economy of one of the nations is being hurt. This means that instead of being a free trade agreement, NAFTA suggests managed trade relationships. Within such an environment, it is also possible to adopt special protection for favored industries or discrimination against outsiders.

However, it can be argued that what North Carolina legislators have done is unconstitutional and goes against the Import-Export Clause Law that prohibits states from imposing taxes on imports and exports. Indeed, the importance of the Import-Export Clause lies in the fact that states are allowed to impose taxes only in the case when the tariffs are not discriminatory in favor of domestic goods.

The protective nature or the tariff introduced in North Carolina presupposes the reduction of imported products in favor of domestic production and the creation of jobs at the expense of foreign workers and manufacturers. Therefore, those foreign companies that have previously imported textiles and furniture to North Carolina would have to cut their costs to afford the 25% taxes, which is often associated with the reduction of the workforce and other additional expenses.

At the same time, as the tariffs on import goods increase, the manufacturers in the state can provide more jobs due to the increased demand for local products in the absence of imported goods. Such a scenario goes against the NAFTA provisions that imply relatively free but managed trade among countries, with foreign companies placed in a disadvantaged position. Therefore, the decision of North Carolina policymakers to increase taxes on imported textiles and furniture should be considered unconstitutional.

Concluding Remarks

In summary, it is recommended that the state eliminates the 25% tax on foreign-produced products since the law is discriminatory in favor of domestic products. While NAFTA allows countries to impose tariffs in some scenarios, North Carolina’s protective regulation to provide more jobs to domestic workers is unconstitutional. This conclusion is also supported by the Import-Export Clause of the United States Constitution that only allows states to impose taxes in instances when there are no limits of interests of foreign producers.

Work Cited

Cheeseman, Henry. Business Law. 10th ed., Pearson, 2018.

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StudyCorgi. (2021, June 11). North American Free Trade Agreement. Retrieved from https://studycorgi.com/north-american-free-trade-agreement/

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"North American Free Trade Agreement." StudyCorgi, 11 June 2021, studycorgi.com/north-american-free-trade-agreement/.

1. StudyCorgi. "North American Free Trade Agreement." June 11, 2021. https://studycorgi.com/north-american-free-trade-agreement/.


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StudyCorgi. "North American Free Trade Agreement." June 11, 2021. https://studycorgi.com/north-american-free-trade-agreement/.

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StudyCorgi. 2021. "North American Free Trade Agreement." June 11, 2021. https://studycorgi.com/north-american-free-trade-agreement/.

References

StudyCorgi. (2021) 'North American Free Trade Agreement'. 11 June.

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