NAFTA, or the North American Free Trade Agreement, is an agreement that was made in 1994 between the United States, Mexico, and Canada. This agreement lifted the majority of all restrictions and tariffs on imports and exports between the included countries. The effects have been felt in both positive and negative ways across the entire continent. Let’s explore what these are.
The Pros of NAFTA
1. Lower Prices For Consumers
The biggest focus of NAFTA was cutting down the tariffs, or taxes, that people have to pay to import and export goods. When the taxes for the supplier are lower, the cost for the consumer subsequently goes down as well. This is beneficial for many people.
2. It Makes It Easier For People From Other Countries To Obtain International Goods
In the time before NAFTA, purchasing and obtaining goods from other countries involved jumping through countless hoops. The North American Free Trade Agreement eased up restrictions, which eased the process of obtaining said goods. This was beneficial for businesses in all countries involved.
3. Paves The Way For New Business Opportunities
Small and mid size business where long restricted to single countries, but after this trade agreement they where able to more efficiently open branches in the countries involved. This helped these businesses to build a global name for themselves.
4. Increases Job Opportunities Across The Board
When you increase the market you are competing in, you also have to increase production. This increase in production created millions of jobs, 5 million in the United States alone.
5. Encourages The Focus To Be Put On Domestic Production
The policies that were created with NAFTA only apply to the three countries that are involved, Mexico, United States, and Canada. Any goods that where purchased outside of North America are still penalized by tariffs. This helps to avoid a country exporting goods that where purchased outside of the agreement. People are now more focused on growing the domestic manufacturing of goods because of the tax breaks.
6. A Reduced U.S. Dependence On Middle Eastern Oil
Since NAFTA was put into place, the United States has been able to greatly reduce the amount of dependence it has had on middle eastern countries for oil. They have been able to export billions of dollars worth of oil from Canada and Mexico at lower prices.
The Cons of NAFTA
1. Workers of Mexico Are Suffering Rather Than Benefiting
Agricultural products, like fruits and vegetables, are one of the biggest trade industries in Mexico. When NAFTA came into effect, the Mexican farmers and workers could not keep up with the rate of production that the United States was able to have. When the U.S. began exporting agricultural goods to Mexico, millions of jobs where lost and their economy was greatly affected.
2. Tariffs May Be Limited, But Regulations Are Not
The taxes that are imposed on goods where lightened, but all goods still must go through a tough regulation process. These regulations can stifle trade and lessen the benefits that NAFTA could otherwise have.
3. The Environment Is Suffering The Most
The United States was able to go over to these other countries and build large, high producing, factories. These countries, such as Mexico, don’t have as strict environmental laws and regulations as the United States does. This caused these factories to ramp up production and cause big pollution problems.
4. Competition In The United Stats Was Hurt
Small business owners in the U.S. had, and still have, some big problems with the way NAFTA has impacted their business. The goods that they where producing, can be produced much cheaper in Mexico due to the fact that workers are willing to work for less pay.
5. NAFTA Isn’t Held Accountable For The Problems It Has Caused
Many companies where forced to file for bankruptcy due to the effects that NAFTA had, but the government will hear nothing of it. Even to today, the government has not given any compensation to the companies it took down.