NAFTA

The North American Free Trade Agreement (NAFTA) has boosted the US economy growth by introducing free trade with Mexico and Canada. Since, after the implementation of NAFTA in 1994, US have experienced several favourable outcomes. The imports and exports of agricultural goods, electronic equipment, machinery, automobiles, drugs, oil and minerals have been increased among the NAFTA countries thus giving rise to total profits. The agreement has also contributed in eliminating the unemployment in United States and has controlled inflation rates. NAFTA bloc has also created number of job opportunities in the country. Moreover, the consumer prices have been decreased and income levels of US citizens have been raised due to reduced tariffs and taxes. This paper will discuss the facts and figures since 1993 and show how United States has achieved benefits with NAFTA agreement.

Nonetheless, many analysts agree that NAFTA has made a mark. U.S.-Mexico trade continues to grow, and NAFTA and the promises it brings have lessened the impact of the Mexican recession and quickened its recovery. Healthy, growing bilateral trade, they say, depends on healthy, growing economies, and Mexico’s recovery and continuing economic liberalization should fuel that trend.

In 1994, the North American Free Trade Agreement (NAFTA) was enacted between two industrial countries and a yet still developing nation. This was an agreement that was the first of its kind due to the relationship that the countries had and the investment opportunities that it presented. The United States, Canada, and developing Mexico decided to work towards eliminating most tariffs and non-tariff barriers between the three in order to increase the flow of trade in goods and services. Since its enactment NAFTA has led to the providing of over 40 million more jobs throughout the countries, and it has also tripled merchandise trade between the three participants to an astounding $946 billion USD in 2008 (NAFTA Now). However even then it is still not very clear whether enacting NAFTA was worth the time and effort and in fact the United States may have been better off not having joined NAFTA.

The North American Free Trade Agreement, commonly known as the NAFTA, is a trade agreement between the United States, Canada and Mexico launched to enable North America to become more competitive in the global marketplace (Amadeo, 2011). The NAFTA is regarded as “one of the most successful trade agreements in history” for its impact on increases in agricultural trade and investment among the three contracting nations (North American Free Trade Agreement, 2011). Supporters and opponents of the NAFTA have argued the effects of the agreement on participating nations since its inception; yet, close examination proves that NAFTA has had a relatively positive impact on the economies of the United States, Canada, and Mexico.

When countries have needs but not the capacity to satisfy those demands they enter into trading through the exchange of surplus, produce to help their trading partners. Canada, Mexico, and the United States created a treaty to establish a relationship that can benefit everyone in this process known as NAFTA. This agreement has been criticized and has been blamed for hurting the US economy more than helping. Although speculations may be misguided, I do not know much about this agreement, and I must research multiple sources. This paper seeks to understand if NAFTA has produced significant benefits for Canada, Mexico, and the United States economies.

Although the agricultural sector of Mexico was affected by NAFTA, the country has another source of income to keep their economy running gasoline and oil, tourism, and the remittance that is being sent through Western Union by families, who earn money in the United States, to their loved ones in Mexico. It was documented in 2008 that there were $25 billion that was sent back to Mexico (The Other Side of Immigration), but even though the country [Mexico] earns through oil, tourism, and remittance, it was still not helpful for the Welton 26 and most Mexicans who migrated illegally to have job opportunities. That is why many Mexicans like the Welton 26 illegally migrated to the United States for better opportunities and to earn more money to provide for the ones they left behind.

Since its creation in 1994, the North American Free Trade Agreement (NAFTA) is a major issue of debate in the United States. The most important issue with NAFTA is how the agreement affects the U.S. economy. NAFTA has had a broad impact on the U.S. economy through creative destruction, globalization, job restructuring, and isolationism. All of these components have had both positive and negative influences on the U.S. economy. Creative destruction creates new jobs to replace the ones that were originally ended by NAFTA, globalization expands ideas, products, and business, but also causes the U.S. to lose money, job reconstruction recreates jobs to fit the functions of NAFTA and sometimes causes workers to lose their original jobs, and isolation

By 1997, three years after the ratification of NAFTA, 47% of Canadian manufacturing plants that existed in 1988, which accounted for 28% of the jobs in the economy, had closed. To add on, 350,000 manufacturing jobs from 2002 -2008, were lost due to industrial plants moving to Mexico. This drastic drop in factory/plant numbers can be attributed to the fact that companies put their bottom line first - moving facilities to Mexico because Mexican minimum wage is only $5.10 compared to a minimum wage of $11.00 in Ontario. As a further incentive to relocate south, because of NAFTA, corporations don’t have to pay tariffs on products shipped back to domestic markets. Therefore, it is evident that NAFTA has resulted in many industrial firms/plants moving to Mexico for cheaper labour, and the impact of such actions has cost thousands of Canadians their jobs.

Since 1993, total trade between the three signatory nations has gone from $290 billion to $1.1 trillion in 2016, with foreign direct investment (FDI) in Mexico increasing by over $90 billion (“NAFTA’s Impact on the U.S. Economy,” 2016). In addition, per capita American GDP growth is estimated to have been around $400 (“NAFTA’s Impact on the U.S. Economy”). Critics, however, still have plenty of material to work with. Though American jobs created by the deal pay on average 15-20% more than jobs lost, across the border in Mexico wages have stagnated with an increase of only 400,000 new jobs (“NAFTA’S Impact on the U.S. Economy”). It is also reasonable to argue that free trade has come at the price of necessary regulation. Since companies could move operations north or south more easily, many unions lost their bargaining power and some businesses began ignoring environmental regulations (Faux, 2013). Mexican small businesses also suffered, giving rise to the claim that NAFTA could have caused more illegal immigration (Faux). As far as FDI was concerned, the U.S. and Canada benefitted significantly more than Mexico (Feils & Rahman, 2008, p. 162). Job losses in labor intensive industries like auto manufacturing were felt the most as the low wage labor became available elsewhere (“NAFTA’s Impact on the U.S. Economy”). Inevitably, these various effects created groups of winners and losers that struggled to agree on NAFTA’s true

With the rise of industrialization, the question of free trade has arisen. Free trade is the elimination of taxes, tariffs and quotas over international borders. The North American Free Trade Agreement (NAFTA), consisting of Mexico, the USA and Canada, creates the largest free-trading zone in the world (Stand 51 1). Does NAFTA help or harm an economy is one of the most poignant questions? The Mexican economy seems to benefit from NAFTA through increased trade of Mexican made products and the availability of more jobs to the Mexican people; however, along with benefits comes a downside. Many American companies have taken advantage of NAFTA and moved production plants to Mexican because there they can exploit the workers. Many companies pay less than 1 dollar an hour in unsafe and unsanitary conditions.

American manufacturing jobs were lost as U.S. firms used NAFTA’s new foreign investor privileges to relocate production to Mexico to take advantage of that country’s lower wages and weaker environmental standards. U.S. job erosion worsened as a new flood of NAFTA imports swamped gains in exports, creating a massive new trade deficit that equated to an estimated net loss of one million U.S. jobs by

It caused a huge labor scare where critics warned that hundreds of thousands of American Jobs were going to be lost to cheap Mexican labor. However five years later, it has been proven that the labor scare that NAFTA produce was unfounded. It is true that the United States lost many jobs but it gained more jobs in return. What critics of NAFTA failed to understand is that trade agreements like NAFTA, where manufacturing jobs are shifted from the developed world to the developing world, are necessary. They are necessary not only to develop the developing world but also to continue in America’s path of development. America has long since passed the industrial revolution. Employment in the United States is now more related to the service industry than manufacturing. The growth of the service industry in the United States while the stagnation of the manufacturing industry shows us that the United States is entering another stage of development. Mexico on the other hand is becoming industrialized and its manufacturing sector is rapidly growing. More people are being employed in manufacturing jobs as less and less people are working in agricultural production. Mexico too is passing into another stage in its development. Mexico is being industrialized while the United States is leaving the industrialized phase and entering a new era where the service business dominates. Trade agreements like the North

The North American Free Trade Agreement (NAFTA) was designed to create trade that was mutually beneficial for all North American countries. Yet a recent change in the U.S. administration has threatened continued trade between the three major players – the U.S, Canada and Mexico. New President Donald J. Trump’s promises to renegotiate NAFTA have both Canada and Mexico on edge, and without stability, can possibly force Mexico to opt out of the agreement altogether. While NAFTA has holes in its implementation, this agreement has aided in economic growth, tripled foreign investment, and lowered prices within the US.

While aiming for economic improvement, NAFTA has worsened the environment of Mexico in the process. Mexico is one of the three countries involved in the North American Free Trade Agreement. Having the second largest

3. I hoped to find sources which would show that the American economy did not improve that much since the NAFTA implementation and that a large percentage of American jobs were lost, which resulted in an adverse impact on the economy. I used the library database search for fifteen sources. I selected all databases, full text, peer-reviewed and scholarly articles and included the words NAFTA, economy and jobs. I also borrowed six books related to NAFTA from the local college library and then searched for five credible websites online. I used the meta search