NAFTA Disadvantages

Introduction

Trading goods and services nationally as well as international is one way in which a country’s economy grows. The purposes of such agreements is to become more globalize and for countries to have better access to foreign goods. With this in mind, trading agreements always come with advantages as well as disadvantages to each participant country. Two of the most famous trading agreements are the North American Free Trade Agreement (NAFTA) and the Trans-Pacific Partnership (TPP).

Question No. 1

The North American Free Trade Agreement (NAFTA) is treaty between three countries. These countries are Canada, Mexico, and the United States of America. The treaty was signed in 1994 and the three countries became the largest free market

According to an article from the New York Times, “The first six years of NAFTA saw unemployment in the United States fall to new lows… and Mexico was able to recover after the financial crisis of December 1994.” (New York Times) Another advantage in which NAFTA was beneficial towards the economic growth is by opening new opportunities for small business. According to an article from inc.com, “NAFTA leveled the playing field by letting small firms export to Mexico at the same cost as the large firms.” (Inc.com) However, there were some disadvantages as well. For example, “the fear that U.S. firms would move to Mexico to take advantage of cheap labor.” (Inc.com) Overall, there are six major pros that outweigh the cons that exist with NAFTA. According to an article the six pros are; that it quadrupled trade between Canada and Mexico, it lowered prices such as oil, the economic output in the trade area grew, NAFTA created jobs, foreign investment more than tripled, and NAFTA reduced government spending. (thebalance.com) The six disadvantages are; it led to the loss of manufacturing jobs in the United States, job migration suppressed wages, NAFTA put Mexican farmers out of business, Mexicans went to work in sub-standard conditions in the maquiladora program, U.S. companies degraded the Mexican environment to keep costs low, and NAFTA allowed Mexican trucks access into the United

An advantage is that the TPP boosts exports and economic growth; creating more jobs for the twelve countries involved. According to an article from the balance, “All countries agreed to cut down on wildlife trafficking.” (Amadeo) It will also eliminate non-tariff barriers such as red tape and protection of state-owned enterprises. (standford.edu) On the other hand, a disadvantage is that, “Most of the gains in income would go to workers making more than $88,000 a year… free trade agreements contribute to income inequality.” (Amadeo) According to an article from Stanford, a downside is that “rather than increasing trade, it will just divert it to members from non-members.