Abstract
This purpose of this essay is to discuss about the economic impacts of NAFTA on US, Canada and Mexico. Several primary as well as peer reviewed sources were studied to write this paper which are mentioned in the references page. This paper has primary focus on the economic impacts of NAFTA on US, Mexico and Canada as NAFTA is signed among these three nations. Most of the effects of NAFTA are criticised by economists. Various trade relationships among Mexico, Canada, and the United States of America have broadened significantly since NAFTA's implementation, although experts conflict over the extent to which this growth is a direct effect of the deal. Furthermore, the effects of NAFTA on the economies of the associated countries are generally not considered welcoming by their nationals.
Introduction
North American countries U.S.A, Canada, and Mexico want to establish a free trade agreement among them. The governments of all three countries i.e. U.S.A, Mexico and Canada mainly support NAFTA which is the North American Free Trade Agreement. In 2008, the presidential elections of U.S. brought interest towards the debate of North American Free Trade Agreement, or NAFTA. The candidates of Democratic Party, Barack Obama and Hillary Clinton, said that they required more debate about the aspects of the agreement. In 2009, Ronald Kirk (U.S. Trade Representative) said that the president, Barack Obama does not want to renegotiate aspects of North American Free Trade Agreement. After the implementation of North American Free Trade Agreement among the uniting bloc, trade volume increased largely among the uniting bloc and the economy of all three countries grow up. Since there are large number of economic factors that impact the economic growth of a country, therefore experts have different opinions regarding North American Free Trade Agreement (NAFTA) implementation .
North American Free Trade Agreement (NAFTA) consists of two parts:
- The North American Agreement on Environmental Cooperation (NAAEC)
- The North American Agreement on Labour Cooperation (NAALC)
Every Free Trade Agreement in the world has the goal to eliminate barriers in trade and investment. Similarly NAFTA was established to eliminate barriers in trade and investment among bloc uniting Mexico, United States and Canada. On 1st January, 1994 after implementation of the NAFTA, it brought elimination of tariffs on one-third of U.S. exports to Mexico and one-half of Mexico's exports to the U.S.A. Within ten years of the functioning of NAFTA’s, all tariffs would be eliminated between US and Mexico. But some of the U.S.A. agricultural products exports to Mexico were phased out within fifteen years. Most of the trade between U.S.A and Canada was already duty free. NAFTA not only to eliminate barriers in trade and investment, it also utilize for the elimination of non-tariff trade barriers and to guard the products intellectual property rights.
Effects of NAFTA on Economies
Trade relationships among Mexico, Canada, and the United States of America have broadened significantly since NAFTA's implementation, although experts conflict over the extent to which this growth is a direct effect of the deal. As per the data from the United State Trade Representative (USTR), the United States' chief negotiator in foreign trade and other free trade accords, the value of North American trade tripled since agreement's inception. The local business investment in the U.S. rose by 117% between1993 - 2007, as compared to a 45% rose in the 14 years past. Mexican and Canadian financial records shows more than 80% of Canadian and Mexican trade is now with uniting bloc of NAFTA partners, and more than a 1/3rd of United State trade.
Impacts on Canada
Canada received an effective positive economic gain as calculated by GDP. Many feared news about some industries failed to materialize, like the furniture industry was expected to bear but grew instead. Manufacturing employment in Canada held stable regardless of an international downward trend in developed countries. Ontario gained huge benefits from the manufacturing opportunities of NAFTA. NAFTA's major economic achievement on U.S.-Canada trade has been to enhance mutual agricultural flows of United States and Canada.
There is a provision in Canada that if somewhat is sold even once as a product, the Canadian government can’t stop its sale in the future. This provision applied on water from Canadian lakes and rivers, The Canadian government ban on bulk water export by sea shattered the business of Sun Belt business venture. The Canadian government revise water legislation due to which claim remains unresolved. Canadian law making bears so many effects come from the implementation of NAFTA. In 1996, an American company brought the gasoline additive MMT into Canada. At the time, the Canadian federal government prohibited the importation of the additive. The American company brought a claim under NAFTA seeking US$201 (million), and that the prohibition was harmful to their company. Canadian other researchers and the United State Environmental Protection Agency disagree with Health Canada, and mention that it’s including possible nerve damage.
The Canada and United States had been disagreeing for years over the United States' decision to impose a 27% duty on Canadian lumber (softwood) imports. On July 1, 2006 Canadian Prime Minister compromised with the United States and reached a settlement. Due to domestic opposition in Canada the settlement has not yet been ratified by either country. .
Impacts on United States
This increase in domestic manufacturing may reflect the greater higher productivity and automation. Although civilian employment of the U.S. have grown-up by approximately 15 million during the period 1993 to 2001, yet the jobs in manufacturing raised by 476,000 during the same period. Furthermore from the period 1994 to 2007, the net manufacturing services have reduced by 3,654,000. During this time of period numerous other trade agreements have successfully been expanded or concluded. Most of the economists are of the same view that NAFTA had some of the positive impacts on the whole employment of United States. On the other hand, most of the others do also agree about the increase which has also been complemented by some of the pounding side effects. A senior member, Edward Alden, at the meeting in Foreign Relations, comments that salary haven't been kept in pace with the productivity of the labour and the income difference in recent years has risen up due to force on the manufacturing base of the U.S.
There are, off course, certain opponents against NAFTA and they have taken a starker place. A policy director, Thea M. Lee, is form the AFL-CIO, and he disagreed with NAFTA and made lobbies beside other trade free agreements as unjust to U.S. corporations and workers until they take in provisions that need signatory nations to increase environmental and labour standards. Lee argues on one of the major upshots of this deal that is “compel workers into direct competition of employees with each other, while assuring these workers fewer protections and rights." The Institute of Economic Policy, a research organization, in a policy broadsheet says that the trade agenda of the deal has functioned to widen the trade deficits of U.S. and also has indirectly pressed some of the U.S. workforce into paying jobs at lower pay scale .
Impact on Mexico
Most of the famous analysts have cited that in Mexico the economic growth has been tremendously flourished since the implementation of NAFTA. Attributing this enlargement totally because of this deal is a blurry process; on the other hand, some experts also say that Mexican growth underperformed the expectations. Mexico's GDP, since 1994, has enormously been raised at an annual rate of more than 2.7 percent, under the average rates of 3.6 % and 3.3 % in Canada and the United States, respectively. The Mexican exports have quadrupled to United States as NAFTA's functioning, from Dollar 60 billion to Dollar 280 billion per annum. American exports have also been increased with an increasing rare, more than three times as the economy of Mexico has grown. Additionally, the trade experts reflect their point of views that the liberalization of trade between United States and Mexico has brought positive effects for ordinary Mexicans, not for only interests of Mexican business. For example, the said deal has ended in to a spectacular reduction in the prices for the consumers of Mexico. GEA (an economic consulting Mexican firm, based in Mexico City), calculates approximately that price of fundamental household goods have halved because of the implementation of NAFTA's. The U.S. government, in the year 2000, financially supported to corn sector by subsidising totalled Dollar 10.1 billion. These subsidies have resulted in to the charges of throwing away, which put at risk the farms of Mexican city and the self-sufficiency of country's food .
Conclusion
The People, all the way through the world, are being suffered with the penalty of this devastating experiment. They are systematizing to require the improved world which is quite possible but the constraint is the race against the time. From the foregone discussion it is evident that NAFTA is not considered welcomed among majority of the nationals of the three associated countries. NAFTA should either be completely abolished or replaced by some other better alternate agreement which addresses the issues of NAFTA while keeping the prime aim of NAFTA intact i.e. free trade.
References
Ann, E. K. (2001). Nafta Stories: Fears and Hopes in Mexico and the United States. Boulder: Lynne Rienner Publishers.
Gary, C. H., & Jeffrey, J. S. (1993). Nafta: An Assessment. Washington, D.C.: Peterson Institute.
Mary, J. B. (1993). NAFTA: U.S. employment and wage effects. Washington, D.C.: Congressional Research Service, Library of Congress.
Ronald, J. W. (1994). NAFTA: a view from Canada. Stanford: North America Forum, Stanford University.
