Essay On NAFTA

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Kenneth Burkhardt
Economics 131: Macroeconomics
February, 2017
Word Count: 1523

The North American Free Trade Agreement, also known as NAFTA, involves Canada, Mexico, and the United States. NAFTA was introduced in January 1994, which provided the elimination of most tariffs on products dealt within these three countries. Some of the major products that were traded relate to agriculture, textiles, and automotive manufacturing. The reason why NAFTA was formed was to protect property, establish dispute- resolution mechanisms, and implement labor and environmental safeguards. The goal of creating this free trade agreement was to bring stronger and steadier economic growth to Mexico, which would lead to new jobs, and opportunities for the current …show more content…

It was introduced to progressively eliminate tariffs, duties, and other trade barriers placed on products and services between Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Nicaragua, and the United States. This was the first free trade agreement that the U.S. had signed with these developing countries. CAFTA-DR strengthens trade and investment trends that have emerged over the past decade. Although the United States remains the dominant trade partner, its share of total trade has declined. The main purpose of this agreement was to develop economic growth through Central American countries and the Dominican Republic through direct investment and export diversification, which means there are various amounts of exports traded to change the country’s export structure. Without export diversification, the specific country’s economic growth will not be established as successfully. Due to the evolution of this agreement, there were some exports that had to be extracted from trading; these exports being mainly agricultural products. However, some of the products being dealt throughout these countries included petroleum, grains, machinery, and medical instruments. The United States not only exports numerous amounts of goods, but also imports them. These imports include sugar, coffee, fruits, cigars, and …show more content…

There are several opinions from various economists in the world today that agree and disagree with the NAFTA agreement. The research conducted for this paper has taught me of which countries the United States trades with. The research also has taught me of the different imports and exports done by the United States. However, I was surprised to learn of the job losses suffered and the unemployment rates that had increased due to this agreement. NAFTA has caused over 700,000 jobs to be lost which forced workers to accept lower wages and benefits. NAFTA also caused undocumented workers to migrate from Mexico to migrate to the United States and emerged global economy that would result in benefits to flow to capital and costs to labor. Although NAFTA has caused a boost in Mexico’s economy by creating thousands of manufacturing jobs, it also put almost two million farmers out of work, which also resulted in an increase in illegal migration to the United States. Out of the three countries included in NAFTA, Canada has been the most successful, especially being seen in the cross-border investment. The Canadian FDI stock increased from 70 billion in 1993 to over 368 billion in 2013. Furthermore, Canadian exports to the United States has grown from 110 billion to 346 billion after the establishment of NAFTA. From this, it is clear that NAFTA could have hurt the economies of these countries or

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