A little Background on the North American Free Trade Agreement
On January 1, of 1994 a new approach to trade amongst North American countries took effect. With the aid of the United States Congress, President Bill Clinton was able to form a contract between The North American Countries of Canada, Mexico, and The United States of America. This contract, known as the North American Free Trade Agreement (or NAFTA for short) was designed with many economic results in mind. Hopes were that not only would trade be easier, cheaper, and more abundant for all countries, but economic wealth and growth would follow. Support for NAFTA was split among most citizens of this country. One side seeing the proposal as having the potential for great economic success in each country involved. The other announcing that this plan would prove to be terribly detrimental to United States employment. 14 years after coming into effect the question still remains Is NAFTA in the best interest of the United States? And what can we expect of it in the future? Since the implication of free trade between the three countries of North America back in 1994 the effects of that agreement are just now becoming apparent, both short term and long term. There was little doubt as to how both Canada and most definitely Mexico would benefit from NAFTA. What was yet to be seen was the impact it had on previous concerns of the United States.
Most economists and even ordinary people could understand Canada and Mexico’s enthusiasm when free trade, destroying tariffs, was proposed. After all, the United States has long been the major consumer of exported goods in both countries. No longer having to pay taxes on goods imported into the United States meant larger sales and more profits for all Canadian and Mexican businesses. These profits were foreseen as perpetual economic boosts in their respective country. These boosts created opportunities for more workers to be hired, lowering unemployment and helping to improve the quality of life of citizens in both countries. Not only did removing the tariffs make it possible for companies and manufacturers of Canada and Mexico to increase profits it also lowered to price of foreign goods. On problem on NAFTA are these new lower prices were now able to compete with the domestic products in the United States. Although usually slightly lower in quality the products made up for their lacking by holding a lower price tag. In Canada most of the predicted effects occurred as suspected. The exports in Canada rose significantly, far out performing exports to the United States and Mexico than in any year previous. Thanks to the economic boom thousands of new jobs were created and filled by unemployed Canadians. More companies then saw opportunity in Canada and opened new plants and factories to take advantage of what is showing to be the healthiest economy Canada has ever experienced. Mexico, like Canada saw results that were similar to what had been expected. Many companies and manufactures saw great economic opportunity in Mexico more so than in Canada. In a country where the government had no set minimum wage rate and a high unemployment rate, factors were perfect for these businesses to make huge profits, never having to worry about filling positions. In Mexico employers could build the same plant as they would have in the United States and fill it with employees making as little as a dollar or less per hour. Union comparisons show jobs paying $10.12 an hour in the U.S. are going for $1.51 in Mexico.
These wages and job opportunity are welcomed with open arms to the unemployed citizens of a poverty stricken country like Mexico. Large businesses are seeing savings of six to ten dollars per hour. That figure times the number of employees it takes to run one of these factories translates into huge profits....
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