Nafta: Good or Bad for the Economy Essay

Published: 2020-04-22 08:25:56
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Category: Mexico

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I choose NAFTA as my topic because most people have strong opinions as to how NAFTA has affected the economy and whether it has had major significance on the job market. I figured that I would provide NAFTAs advantages and disadvantages and provide my opinion. NAFTA has had some advantages, for example NAFTA created the worlds largest free trade area, linking about 440 million people and producing $17 trillion in goods and services annually, trade between the NAFTA signatories, form $297 billon in 1993 to almost one trillion in 2007. This information I was able to locate in the article Advantages of NAFTA by Kimberly Amadeo. In this same article Amadeo mentions that exports from Canada and Mexico to the U.S grew from $142 billion to $452 billion. Then NAFTA has been helpful for agricultural exports because it reduces high Mexican tariffs. Mexico is the top export destination for beef, rice, soybean meal, corn sweeteners, apples and beans Mexico is the second largest producer of corn, soybeans and oils.

As a result of NAFTA the percentage of U.S agricultural exports to Canada and Mexico has grown from about 22% in 1993 to about 30% in 2007. NAFTA has increased trade services, including financial services and health care items as these items arent as easily transported as are goods, so being able to expand services to nearby countries is important. Since NAFTA was enacted U.S foreign direct investment in Canada and Mexico tripled to about $340 billion as of 2006. Now that Ive discussed the advantages of NAFTA, here are a few of the disadvantages. NAFTA has allowed U.S manufactures to move jobs to lower cost Mexico since labor is cheaper in Mexico. The manufactures that remained had to decrease their wages just to compete. Kimberly Amadeo states that in the article Disadvantages of NAFTA between 1994 and 2002 the U.S lost about 1.7 million jobs and only gaining about 794,000 or a net loss of 879,000 jobs, states that were hit the hardest included California, New York, Michigan and Texas. These states had high concentrations of their industries moved to plants down in Mexico. These industries included cars, textiles, computers, and electric appliances. Mexicos farmers were also being put out of business.

As the tariffs were removed, corn and other foods are exported to Mexico below cost. This is a benefit to consumers who pay less for the food items, but it makes it impossible for rural Mexican farmers to compete. As you can see from the above NAFTA has its pros and cons, the non supporters of NAFTA would say that NAFTA has ruined Mexican farmers and their economy, and that the U.S has lost thousands of jobs to other countries where the labor is cheap and the companies do not have to worry so much about the rising costs of health care benefits. The supporters of NAFTA say that NAFTA has increased trade services, boosted the economy of Mexico and increased the exports from to Canada and Mexico while increasing the US economy. Both the supporters and non supporters have valid arguments and the data to back up those arguments. I live in Michigan which is one of the states that have been hit hard by the significant job loss in the auto industry.

My father has been a loyal General Motors employee for the past 34 years and through divine intervention he still has his job. But through the years and he has seen so many of the automotive plants located in MI close and his friends lose their jobs and have those same jobs that they use to perform be performed in Mexico or elsewhere for lower wages. The loss of jobs has also affected the businesses that provide the parts and supplies to the auto industry like Visteon who provides auto parts to Ford and Delphi who provides parts to GM. I dont feel that NAFTA has produced tremendous benefits to the U.S, Mexico and Canada, NAFTA has had a positive effect on the three economies as a whole but it also has had its negative effects. But I do agree that NAFTA has assisted in increasing trade between the three countries and has increased the U.S agricultural exports.

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