NAFTA: Good or Bad for the economy
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 NAFTA’s advantages and disadvantages and provide my opinion. NAFTA has had some advantages, for example NAFTA created the world’s 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 aren’t 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 I’ve 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