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January 20, 2004
The Pros and Cons of NAFTA
The North American Free Trade Agreement turned 10 years old this month, but the years have not dimmed the controversy. Find out why some consider it a success and others think it's a huge flop:
The first day of the year marked the 10th anniversary of the North American Free Trade Agreement, but instead of celebration, this milestone was greeted with renewed debate. If you listen to its backers, you will hear that NAFTA is a smashing success, helping stabilize Mexico's economy while moderately bolstering the economies of the U.S. and Canada. And if you pay heed to its critics, you will be informed that NAFTA?which opened up the flow of goods and investment through the U.S., Canada and Mexico?is an expensive flop, resulting in the loss of U.S. jobs and dealing a blow to Mexico's workforce, economy and environment.
Here are both sides of this raging debate:
Supporters say:
? The accord has stimulated democratic reform and opened markets in Mexico.
? According to the Bush administration, the agreement has been "improving lives and reducing poverty in Mexico."
? The administration also claims that NAFTA has led to income gains and tax cuts amounting to about $930 each year for the average U.S. household of four.
? Many of the 20 million new jobs the U.S. generated from 1993 to 2000 can be attributed to the free-trade bloc that NAFTA created, the administration continues. And negatives such as the escalating U.S. trade deficit and three years of dwindling factory jobs should be pinned on feeble demand abroad and the U.S. recession, certainly not on NAFTA, the administration contends.
? NAFTA brought in a flood of foreign investment and contributed to a 24% rise in Mexico's per capita income. "NAFTA gave us a big push," Vicente Fox, President of Mexico, tells Business Week. "It gave us jobs. It gave us knowledge, experience, technological transfer."
Detractors contend:
? The agreement has taken a toll on both U.S. and Mexican jobs, according to the Institute for Policy Studies (IPS). While real wages for Mexican manufacturing workers declined 13.5%, more than half a million U.S. employees have entered government retraining programs after their companies moved production south or north of the border, says IPS.
? NAFTA has wiped out Canadian social programs, purports IPS.
? The pact has also destroyed Mexico's small farmers, says IPS, bringing in an influx of subsidized U.S. food imports. In fact, about 1.3 million farm jobs have been lost since 1993, indicates a recent report by the Carnegie Endowment for International Peace. "NAFTA has been a disaster for us," remarks pig farmer Julian Aguilera to Business Week.
? The Carnegie report also concluded that the pact has generated few new jobs in Mexico and might only be credited for a "very small net gain" in jobs in the U.S.
? The new study also found that NAFTA has been ineffective in stemming the tide of illegal Mexican immigrants entering the U.S. to find jobs. In fact, according to most estimates, the number of Mexicans working illegally in the U.S. surged to 4.8 million in 2000, more than twice the 1990 total.
What's the Verdict?
So is NAFTA a success or a failure? While its backers and bashers continue to take impassioned positions, many choose the middle ground. In a recent Business Week article, Jeffrey Garten writes, "When it came to job generation vs. destruction in the U.S., NAFTA's impact has been pretty much a wash." And the Carnegie Endowment for International Peace comes to the same conclusion, calling the pact "neither the disaster its opponents predicted nor the savior hailed by supporters."
Sources:
10 Years Ago, NAFTA was Born
James Cox
USA Today, December 30, 2003
www.usatoday.com/money/economy/trade/2003-12-31-nafta_x.htm
Mexico: Was NAFTA Worth It?
Geri Smith and Cristina Lindblad
Business Week, December 22, 2003
www.businessweek.com
At 10, NAFTA is Ready for an Overhaul
Jeffrey E. Garten
Business Week, December 22, 2003
www.businessweek.com
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Comment
34 CommentsI think that the US must follow its accordance, BENEFIT the three countries EQUALLY and this involves also care. Mexican environment is stumbling because of this treat. Of course, it has brought us benefits, such as a growing income, but at what price? Can't something be created free-materialist interest and focus on what it really matters?
February 12, 2007 8:09 PMI'm kind of sitting on the fence about this whole NAFTA thing. There are many advantages as well as disadvantages, so I'm having a hard time with that one.
Anyways, I noticed someone commented that "we need to stop being so dependent on others to fill our own needs." But if you think about it, if we're not dependent on anyone, and we run out of resources, what then? I think we should have some sort of back-up plan and, right now, NAFTA is what we have to fall back on.
May 22, 2007 5:49 PMFor your information Canada can get out of this agreement by a six month notification!
June 24, 2007 7:21 PMFree trade would be ok if was FAIR. US companies continue to take their jobs overseas for cheap labor, so they can compete with other cheap labor. How can an American worker compete against a Chinese worker especially if China is communist? The only way things will really become fair is if countries that take our jobs become democracies.
June 26, 2007 6:36 AMokay okay... i am a student attending highschool and i was actually doing a little research paper on NAFTA, and i am a bit confused as why there is controvsy in the first place. From what i researched NAFTA was made to benefit the people as their objective was to promte enviroment of free competition by eliminating tariffs... i know i don't need to get into all this because you guys are obviously more educated than me, but if it was made for better opportunity for the three members, why are there downsides to this pact. and instead of talking about it on this site, even though i think its pretty cool, but still we should take action before it is too late to do something about it... lol. I'm just a boy wanting to know some information... take it easy, everyone
October 5, 2007 11:56 AMRead the article and use spell-check before asking a question, you Cretan.
October 5, 2007 2:15 PMHey highschool kid, I'm in college writing a paper on the effects of NAFTA on American jobs. Don't you get the fact that NAFTA is just another way of big bussiness in the U.S. being able to move to Mexico and China and make a cheaper product while still keeping the same high price of what they are selling. I use to work in a factory and made washers and dryers, the company I was working for is currently moving part of their plant to Mexico. If that whole plant moves then that is 2000 people out of a job. And the company can still ship their products here with out paying a high tax on imports. If many of this big bussiness leave the U.S. we will become more and more depend on other countries for things, and what is the point of being a country if we can not stand on our own two legs.
October 28, 2007 5:14 PMBottom line up front is that The NAFTA had the potential to combined three different life styles along with there economies, but like always people worked the system and pushed the rules eventually causing the rich to get richer and the poor to get poorer. One day something will have to give!
November 5, 2007 10:29 PMSome of you are just plain STUPID! If everyone would just look at how the economy of the United States is doing, (DEBT) you would know without a doubt that NAFTA is a failure. I am from Topeka, Kansas, and we are loosing jobs to Mexico. YUP! Even in the Bible Banging Midwest, we are hearing the great sucking sound of lost employment. The only Businesses in town that are doing really well are the p0rn shops and bars and street corner hookers, because unemployment checks are running out and people are not able to find a job with a living wage. There are families that have broken up. YUP! NAFTA has even become a Marriage Breaker. O.K. It's time to end the "Great Experiment" and move back into reality. NAFTA MUST GO!
November 14, 2007 6:41 AMA lot of people keep bringing up job loss as the main reason NAFTA is a failure. If you want to talk about job loss, look at what jobs we are losing to China and other East Asian countries.
If you have taken any economics class, you would realize that all low-skilled jobs are leaving the United States. There is no reason for them to stay here, why pay someone 15 dollars an hour when there is someone elsewhere that is willing to do the job for less. You are correct, greed. But even if NAFTA stopped, job loss wouldn't. People are greedy. End of story.
Now, with that said, job security is somewhat more stable with high skilled jobs (even though Indians are becoming well educated at a fast rate). North Carolina has been losing jobs in the furniture and manufacturing areas BUT local community colleges have started to offer specialized educational training for higher skilled jobs, which is not that expensive. Most companies who have moved out of NC have offered their ex-employees some kind of discount to take these courses so that they can move on to higher skilled jobs.
That is what the United States is, high skilled workers who export the low skilled jobs. Now you understand why your mom always told you to do well in school so you won't have to end up at a factory worrying about if your plant will be shut down.
I know that is harsh but it is the raw truth about our country. No one is going to look out for you. You have to get it yourself and as much as it sucks, you gotta live with it.
Overall, free markets are a good thing. However, non-tarriff barriers and tarriffs are essential in small countries so that they can protect their small business and be able to withstand a world market. Overall, NAFTA has done well and it is as also failed, I understand where a lot of the writers are coming from but at the same time take advantage of what we have in this country still - very affordable and stable education.
I just dont think that anything will change - you gotta fight for you and yours and not rely on government to ever to the right thing. No matter what government does on ANY issue, there is ALWAYS a loser.
November 25, 2007 9:05 PMThe problem is, and is already happening. Is that Canada cannot give itself first dibs anymore. If our people freeze due to some shortage, we cannot divert fuel from our sales to the u.s. to counter our own freezing famalies, or stalled cars.
Under the pact, we would have to lower our use before lowering our sales, but if we already have a shortage, we'd be putting more Canadians in the cold, or leaving them car-less, so that u.s people could drive hummers around.
It's imperial control and not fitting of a nation of the u.s freedom loving thinking. They are controlling us like Vichy France. I'm sure they'd gun us all down without though if need be to get the resources.
December 19, 2007 11:55 AMTo all the Canadians who are crying about NAFTA. I know you pride yourself in history. Take a look who had proposed NAFTA. It was your fine Premier. Canadians should stop blaming the US for all their problems. It is long overdue that Canada has its own identity (though every citizen will proclain how they do) and quit acting like the step child to the US. You are having an identity crisis.
January 15, 2008 6:08 PMNafta...Good or bad. I dont know. I do know that companies were moving out of this country long before Nafta was signed by Pres. Clinton. If you ask the average person in my "neck of the woods" they all think its bad. The giant sucking sound of jobs leaving the USA going to Mexico. My understanding of Nafta was a leveling out of tarifs to make trade fairer between the 3 countries. I'm not sure this has happened. Do you know??
February 1, 2008 10:49 AMThe NAFTA is just bunch of B.S. Is way that the first world country, the United States, takes over the economy of second world countries, such as Mexico and Canada. The United States loves power and its exactly what it is doing with this. Its supposed to help Mexico and Canada, but instead it takes their economy and jobs away. Why lie US Government, the only ones benefiting from it is the US economy.
February 19, 2008 9:31 PMThis is a repy to sonia's comment who said that Canada is a second world country.
I can't believe that you would classify Canada as this. Do you even know what a second world country is?Its a country that was once or still is under communism. It also has a high economic development but has social development the same as a poorer country.
Next time, check you facts before you post.
April 14, 2008 6:10 PMI really like cheese, and the best cheese comes from Wisconsin. Since i live in Ontario, NAFTA allows me to buy cheese for less. So I think NAFTA is amazing.
April 22, 2008 11:42 AMThis is an incredibly good article and its really easy to read and understand. Whoever wrote it did a good job!
As for my verdict on NAFTA... well I can't say that I really have one as it is both positive and negative for all three countries. I guess if I ever am affected by it directly through some business I will find it positive or negative, but until then it stays nuetral with me.
May 4, 2008 4:47 PMIt should be clear to our regular readers that we run the Comments here on the IMT blog without heavy-handed filters and without requiring commentators to register as a member. We'll allow just about anything in our Comments section. But we will delete anything explicitly obscene, racist, homophobic or completely off topic. We reserve the right to delete or ban at whim.
That said, due to a huge influx of spam on this post as well as a growing number of vile, flat-out unpublishable responses from people who appear to be third-graders who happened to stumble across this post, Comments will no longer be allowed on this page.
For more recent NAFTA coverage and some insightful, or at least well-considered opinions written by readers with clarity, go here: http://tinyurl.com/3kxofm
Regards,
IMT Editor
06/09/08
