An American Free Trade Area: NAFTA

Paper Summary:

The writer discusses whether the NAFTA agreement has boosted investment and trade as substantially as was promised by the negotiators of the agreement. The paper shows that there are positive results from NAFTA, however, workers, communities and the environment in all three countries (Canada, Mexico and the United States) have also suffered from the agreement's flaws. In summation, the results of the agreement are more negative than positive. But, despite its shortcomings, there is continued hope that the three trading partners can come to a firm, better understanding that recognizes shortcomings and works to eliminate them.

From the Paper:

"There are some positive results, however. "The North American Free Trade Agreement has realized its goal of increasing trade between the United States, Mexico and Canada, even though some business sectors have lost ground, U.S. Rep. E. Clay Shaw said Monday. NAFTA, implemented in 1994, lowered trade barriers among the three countries. From 1993 to 2001, trade among the NAFTA nations climbed 109 percent to $622 billion from $297 billion, according to the U.S. Commerce Department. But Shaw acknowledged that some Florida farmers, especially tomato growers, have been damaged by cheaper imports from Mexico. U.S. jobs also have been lost in the textile and apparel industries" (Salisbury 7B). It is the serious inequality of Mexico's income distribution remains a major problem, fundamentally explained by deep educational and cultural factors rather than by specific trade regimes. But if anything, one could argue that trade protection boosts profit margins, reduces the scale of operations of firms, and maintains high unemployment and underemployment rates, thus keeping wages low. Mexico was a heavily protected economy for over six decades and has only been liberalizing its trade for the last 15 years. And NAFTA has only reached its tenth anniversary. There are many steps needed to improve income distribution. Depending on temporary fixes isn't the answer."

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