The North American Free Trade Agreement, signed in 1994, created the world's largest free trade area, covering the United States, Canada, and Mexico. Not everyone agrees about the value of NAFTA.
The act has more than tripled trade between Canada, Mexico, and the United States since it was enacted. The agreement reduced and eliminated tariffs.
Greater trade increased economic output.
Growth generated by NAFTA created jobs.
Foreign direct investment (FDI) more than tripled.
NAFTA lowered prices. U.S. oil imports from Mexico cost less because NAFTA got rid of tariffs. Low-cost oil reduces gas prices, which reduces transportation cost. Food prices are lower in turn.
The agreement helped reduce government spending. Government contracts became available to suppliers in all three member countries, which increased competition and lowered costs.
NAFTA led to job losses in certain industries, mainly in California, New York, and Texas. Though the estimated job gains is greater than those lost, the following industries lost jobs: manufacturing, automotive, textile, computer, and electrical appliance industries.
Job migration lowered wages. Companies threatened to move to Mexico to keep workers from joining unions. Without the unions, workers could not bargain for better wages.
NAFTA put Mexican farmers out of business. It allowed U.S. government-subsidized farm products into Mexico. Local farmers could not compete with the subsidized prices. It forced unemployed farmers to cross the border illegally to find work.
Unemployed Mexican farmers went to work in substandard conditions in the maquiladora program.
U.S. companies damaged the Mexican environment to keep costs low. Agribusiness in Mexico used more fertilizers and other chemicals, resulting in increased pollution. Rural farmers were forced into marginal land to stay in business, resulting in increased deforestation rates. That deforestation contributes to global warming.
NAFTA allowed Mexican trucks access into the United States. Mexican trucks are not held to the same safety standards as American trucks. Congress blocked this provision.
Source: NAFTA Pros and Cons
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