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The Pros And Cons Of NAFTA

679 Words3 Pages

The North American Free Trade Agreement (NAFTA), which came into force in January 1994, is a negotiation by the governments between three countries Canada, Mexico, and the United States. NAFTA’s major purpose is to eliminate most tariffs on products traded among participated countries. The main focus was to liberalize trade in agriculture, textiles, and automobile manufacturing. Its aiming is to protect intellectual property and implement labor and environmental safeguards. In a 2012 survey of leading economists, 95% supported the notion that on average, U.S. citizens benefited on NAFTA. 1) Job creation/ GDP Usually when a country is experiencing economic growth, there is also an increase in employment. As a result, since trade liberalization can contribute to the increasing GDP, NAFTA helps bringing the rate of unemployment down in the U.S. In particular, from 1993-2005, the U.S.’s real GDP increased by 48%. The average unemployment rate during this period was …show more content…

Furthermore, economists estimated that each $1 billion in US exports supported 8500 manufacturing jobs. Moreover, in export-oriented industries, wages are 13-16 percent higher than the national average. The USTR showed that the overall U.S. employment has increased 24 percent since NAFTA's implementation, and the unemployment rates has declined over the same period. In addition, the USTR showed that inflation-adjusted U.S. wages rose 19.3 percent from 1993-2007, compared to only 11 percent in the previous fourteen years. Thanks to import competition, prices fell and the quality of goods improved, which significantly benefit consumers. In a 2014, in the study of PIIE about NAFTA's effects, each year, jobs on net lost about 15,000 because of the agreement; however, for each of those jobs lost, the economy gains $450,000 because the productivity is higher and the consumer prices is

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As other industries when to bankrupt, maquiladoras profited. NAFTA, which is the North American Free Trade Agreement, contributed to the expansion of the maquiladora industries in the early 1990s resulting in an increase in the maquiladora job market. When American companies started to set up in large numbers, multi-party democracies began to dominate the northern part of Mexico. With the additional influence of American ideals, Mexico’s maquiladoras have strengthened both cities. In the midst of the early 1990s and early 2000s, the growth between that time span for maquiladoras had an annual average rate of 10%.

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The NAFTA is a free trade agreement that was formed between the three countries of North America, or more specifically Canada, the United States, and Mexico. The main function of NAFTA is to eliminate all trade barriers between the three countries, such as tariffs, to lower the prices of groceries produced by the three countries involved. NAFTA grants the “most-favoured-nation” status to goods produced by the countries involved, which means that these goods must receive equal treatment as domestic goods. They also cannot give a better deal to non-NAFTA countries. This trade agreement greatly benefited the economies of the three countries, and increased the Canadian-Mexican trade eightfold and total merchandise trade between Canada and the United states more than doubled.

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If I didn't believe that, I wouldn't support this agreement.” NAFTA has constructed more jobs in different sectors from automotive to energy and agriculture. Jobs are also established in areas of

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This helped increase the United States GDP which then led to a growth in jobs. “For NAFTA countries, free trade has been beneficial, not harmful, as the increase in employment demonstrates: 40 million more people are at work now in Canada, Mexico and the United States as compared with 23 years ago at the start of NAFTA”(Milke). Milke analyzes the benefits of NAFTA by comparing past statistics to present day statistics. This is a very eye opening technique because it allows the reader to see how far the trade agreement has come. There are many benefits for countries who seek trading.

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The impact on U.S. wages was to be expected. The majority of workers who lost their jobs lost a permanent source of income in the process. It also gave employers the ability to force workers to accept lower wages. As soon as NAFTA was put into effect, U.S. employers began to tell workers that the company will move to Mexico unless they lowered the cost of their wages. These same threats were used against labor unions.

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Many blames the substantial loss of jobs, as U.S. companies outsource and ship tasks to Mexico, Latin America and South-East Asia as an outcome of this liberalized trade contract. " Argument a decade back over the North American Free Trade Agreement, or NAFTA, drew loud cautions that liberalized trade with Mexico would lead to substantial job losses in the United States Trade with Mexico has actually skyrocketed given that NAFTA's debut in 1994, but recent research studies have concluded that the United States did lose more tasks in different markets than it gained because of the pact" (Wall Street Journal, December 8,

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The North American Free Trade Agreement has slightly increased the overall economy of the United States, but some industries have been negatively affected. Experts estimate that NAFTA increases U.S. GDP by just a few billion dollars a year- only a few hundredths of a percent increase (Villarreal). U.S. overall trade with North American countries shot up. Trade with Canada increased from 240 billion dollars in trade in 1994 to 610 billion dollars in 2012-- an 87 percent increase (DeBelius). Trade with Mexico increased from 100 billion dollars in 1994 to 490 billion dollars in 2012, which is a 132% increase (DeBelius).

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NAFTA took effect in January of 1994.Its main purpose is to increase the agriculture trade and investment among the three countries. According to the department of agriculture, Mexico lost over 900,000 farming jobs in the first decade of NAFTA. ( McKenzie, 2015 ). Before NAFTA people of Mexico grew corn and was able to support their family and country economy. Shortly after NAFTA cheap American corn came pouring in form the borders, which caused a major effect on families that were working in farms in Mexico.

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NAFTA has fallen short of creating the jobs and the local economic integration its promoter’s guaranteed in the past. Trade relations have expanded considerably, and U.S. manufacturers established supply chains throughout countries that have made businesses more competitive globally. This may have fueled economic growth. Unfortunately, almost 750,000 U.S. jobs have been lost since enacting NAFTA. This including those of the automotive industry.

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Strongly enough, NAFTA’s linking of economies from three different countries created the world 's largest free trade area consisting of millions of people. For example, NAFTA has provided many benefits including “Quadrupled trade, lowered prices, increased economic growth, created jobs, increased foreign direct investments, and reduced government spending.” (6 benefits) At the same time, the NAFTA agreement has also created problems, especially for the U.S and Mexico, including “U.S jobs were lost, U.S wages were suppressed, Mexico’s farmers were put out of business, maquiladora workers were exploited, Mexico’s environment deteriorated, and NAFTA called for free U.S access for Mexican trucks.” (6 negative

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It caused the American manufacturers a great deal of troubles as domestic products have gradually lost their competitiveness with each passing year. On the other hand, due to the wide disparity of labor costs between the US and Mexico, large numbers of US manufacturing facilities relocated to Mexico in the hope of saving costs. Hence, in 1997 three years after the enactment of NAFTA, the US has lost more than 400,000 jobs which was described as a “trade debacle” . Also last year, according to the American largest labor union, the AFL-CIO, the NAFTA deal led to “an exodus of at least 700,000 jobs” , which almost doubled the record from 17 years ago.

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