The North American Free Trade Agreement

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The North American Free Trade Agreement, known as NAFTA, is a trilateral trade agreement between Canada, the United States, and Mexico. Signed January 1, 1994, NAFTA’s main purpose was to reduce trading costs, increase business investments, and help the United States be more competitive in the global marketplace. The agreement would eliminate all tariffs on half of all U.S. goods shipping to Mexico and introduce new regulations to encourage cross-border investments. According to President Bush, trade deals give birth to jobs, more jobs mean higher incomes for the American people, which in turn means a boom for the American economy.

However, in 1993 negotiations created union-backed protests across the nation against the creation of a free-trade zone, while at the same time prominent economists and government officials still predicted NAFTA would lead to hundreds of thousands of jobs and more sales of U.S. products abroad. Since the inception of NAFTA in 1994 those jobs did not materialize because simply put trade can both create jobs and destroys jobs. Of course, increases in U.S. exports can potentially create jobs. However, increases in imports can reduce jobs because imports displace goods otherwise made in the United States. Ultimately, some of the results that followed as a result of NAFTA ended up eroding labor conditions for two nations with some of the worst impacts felt south of the border.

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