There has been wide discussion and a great many articles and research related to the impact of the North American Free Trade Agreement (NAFTA) on the economy, level of employment, and environment in each of the member countries, Canada, US, and Mexico [Anders, 1992; Donahue, 1991; Hills, 1992]. However, there is very little research as to the effect of NAFTA on the flow of services among the member countries, such as legal, banking, insurance, and accounting services. It is only logical to assume that as the volume of trade among these three countries increases so will the demand for legal, banking, insurance, and accounting services.
This conclusion is supported by evidence obtained from the Free Trade Agreement (FTA) between the US and Canada [Dick, 1991; USITC, 1992]. FTA not only increased the volume of trade between Canada and the US, but also the flow of legal and accounting services from one country to the other. It is expected that NAFTA will have a similar impact.
The objectives of this paper are to investigate the impact of NAFTA on: (1) free movement of accountants across borders; (2) harmonization of the requirements for accounting certification; and (3) harmonization of accounting standards among Canada, Mexico, and the USA.
The objectives of the North American Free Trade Agreement are to: (1) eliminate barriers to trade and facilitate the cross-border movement of goods and services between the territories of the parties; (2) promote conditions of fair competition in the free trade area; (3) increase investment opportunities in the territories of the parties; (4) provide adequate and effective protection and enforcements of intellectual property rights in each party's territory; (5) create effective procedures for the implementation and application of this agreement; and (6) establish a framework for further trilateral, regional and multilateral cooperation to expand and enhance the benefits of this agreement [US Government, 1992A].
Some claim that NAFTA will create a North American market with over 360 million consumers and combined gross domestic product of about 6 trillion dollars. About 65% of US industrial and agricultural exports to Mexico will be eligible for duty-free treatment either immediately or within 5 years. With NAFTA, Mexican tariffs on vehicles and light trucks will be cut in half immediately. NAFTA will open Mexico's $6 billion market for telecommunications equipment and services. Barriers to trade on $250 million of US exports of textiles and apparel to Mexico will be eliminated immediately, with another $700 million freed from restrictions within 6 years. All North American trade restrictions will be eliminated within 10 years. NAFTA will immediately eliminate Mexican import licenses, which covered 25% of US agricultural exports last year, and will phase out remaining Mexican tariffs within 10-15 years. Mexico's closed financial services markets will be opened, and US banks and securities firms will be allowed to establish wholly owned subsidiaries. US insurance firms will gain major new opportunities in Mexican markets [Hills, 1992; Congress of U.S., 1992; US Government, 1992B].
On the other hand, some believe that NAFTA will increase unemployment in the US and harm some US industries such as the steel, auto, athletic shoes, furniture, glass, cement, brooms, sugar, tobacco, citrus, and canning industries [Anders, 1992]. Environmentalists predict there will be some damage to the environment such as poisoning of soil, water and air and other crimes against nature by companies that place manufacturing plants in Mexico near the US border. Other experts believe that NAFTA will also have some damaging effect on health and safety standards. Some argue that many US companies will move to Mexico to escape the more strict and rigid US laws related to health and safety standards [Donahue, 1991]. In addition to impact on employment in the US and on the environment, some believe that NAFTA will negatively affect the industries that presently were established to take advantage of duty drawback, Maquiladora, and foreign trade zones [O'Dell, 1992]. …