The Problems with NAFTA Not Helping Economies
"The free trade argument states that, if each nation produces what it does best and permits trade, over the long run all will enjoy lower prices and higher levels of output, income, and consumption that could be achieved in isolation."
The North American Free Trade Agreement (NAFTA), started in January of 1994, created a situation in North America in which there are no taxes on most products imported and exported between the three countries. Ideally, the governments of Canada, the U.S. and Mexico believed that breaking the trading barriers would increase jobs and other things as it improved each of their economies. NAFTA, however, has not necessarily helped the economies in the way in which the governments had projected. There was much speculation before the signing of the treaty that NAFTA would not work out the way it was projected to. Some economists believed that one major problem which NAFTA would create, as opposed to what the governments thought, is loss of jobs. "In Canada and the United States, much of the political opinions against NAFTA has centered around the low wage rates in Mexico and the possibility of jobs being moved south of the Rio Grande River" (Dentzer). It had seemed obvious for some that many wealthy factory owners would move to or expand in Mexico, resulting in thousands of lost jobs. This would clearly create more exports for Mexico, and less exports for Canada and United States. In the eight months after the start of the agreement, Canada had exported 33.2% more to Mexico and imported 31% more from Mexico than usual. This may show that Canada still exported more to Mexico then it imported from them, but, one must think that when the agreem...
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...ents of all three countries in the agreement that NAFTA would cause great economic growth. Somehow, the governments were somewhat off in their predictions. Now Canada, and the rest of the western hemisphere, will suffer.
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Carbaugh, Richard G. International Economics. U.S.A.: Wadsworth
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Dentzer, Susan. "The Pain and Gain of Trade." U.S. News Sept. 1992: 62+.
Harbrecht, Douglas. et al. "What Has NAFTA Wrought? Plenty Of Trade."
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USA Buy NAFTA?" The Nation June 14, 1993
He then, states that the number of jobs lost barely even put a dent in the number of jobs produced by trade. Another important issue of the trade system is that the people who get rich from trade, keep getting richer while the poor stay poor. This is partially solved by protectionism (taxing imports), although it slows economic growth in the long run and protects some of the jobs that would be lost in the short run. To help understand the price of trade barriers, he explains this by stopping trade across the Mississippi River. This shows that the east side would then have to stop producing their goods and spend some of their time producing what the west side used to export. Although, there would be an increase in jobs, it would not be efficient because they are not using specialization to their full advantage. The author then moves on to the point that trade lowers the price of goods, due to it being cheaper to produce in other areas. He portrays this by showing why Nike can produce shoes in Vietnam instead of the United States. He further elaborates his point by proving that trade helps poor countries as
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The North American Free Trade Agreement—NAFTA—was an important agreement signed between three countries—the U.S., Mexico and Canada. NAFTA played an important role between each of these countries’ relations with one another through imports and exports. Throughout the presidential elections throughout the years, NAFTA has been highly debated on whether or not it has helped benefit the economy of these countries or if it has caused a lot detrimental issues. NAFTA promised many benefits for these countries, but not all of their promises were carried through; many views across the political spectrum also have their indifferences about NAFTA.
...munity. Although Canada is dependent on trade with the United States, NAFTA proves that the relationship goes both ways. Canada proved its worth in the global financial crisis, showing that it can practice good policy despite the dependence.
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The United States free trade agenda includes policies that seek to eliminate all restrictions and quotas on trade. The advantages of free trade can be seen through domestic markets and the growth of the world economy. T...
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Globalization has become one of the most influential forces in the twentieth century. International integration of world views, products, trade and ideas has caused a variety of states to blur the lines of their borders and be open to an international perspective. The merger of the Europeans Union, the ASEAN group in the Pacific and NAFTA in North America is reflective of the notion of globalized trade. The North American Free Trade Agreement was the largest free trade zone in the world at its conception and set an example for the future of liberalized trade. The North American Free Trade Agreement is coming into it's twentieth anniversary on January 1st, 2014. 1 NAFTA not only sought to enhance the trade of goods and services across the borders of Canada, US and Mexico but it fostered shared interest in investment, transportation, communication, border relations, as well as environmental and labour issues. The North American Free Trade Agreement was groundbreaking because it included Mexico in the arrangement.2 Mexico was a much poorer, culturally different and protective country in comparison to the likes of Canada and the United States. Many members of the U.S Congress were against the agreement because they did not want to enter into an agreement with a country that had an authoritarian regime, human rights violations and a flawed electoral system.3 Both Canadians and Americans alike, feared that Mexico's lower wages and lax human rights laws would generate massive job losses in their respected economies. Issues of sovereignty came into play throughout discussions of the North American Free Trade Agreement in Canada. Many found issue with the fact that bureaucrats and politicians from alien countries would be making deci...
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