NAFTA

As the marketplace becomes more global, corporations are forced to find ways of retaining competitive advantage. Lower costs, increased profit margins, and competitive advantage are all necessary to compete in the global market. One phenomena that these objectives have spurred is an increasing degree of free trade, i.e., a reduction of trade barriers, tariffs, quotas and government legislation restricting free and open trade. In line with this development, many trade pacts or agreements have emerged during the past decade, including one of the most controversial, the North American Free Trade Agreement (NAFTA). NAFTA became an official piece of trade legislation on January 1, 1994 and includes Canada, Mexico and the United States. The agreement was designed to help slowly eradicate tariffs and other trade barriers on goods manufactured and sold in North America. The passing of NAFTA created the world's second biggest free trade region, in comparison to the world's largest, the European Economic Area which is a similar trade agreement encompassing members from the European Union and the European Free Trade Association. In all three countries involved in NAFTA, legislative debates ensued because many interests involved considered NAFTA detrimental to workers and jobs. In the U.S. this was especially true where labor and trade unions were concerned, "When the details of NAFTA were being considered and debated by Congress, American labor and trade un

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aid to employees laid off because of competition from Mexico of Canada. More than 20,000 workers in North Carolina have qualified for the training. Still, the North Carolina economy has held steady, with unemployment hovering around 3.5 percent. But NAFTA proponents insist that trade with Mexico is creating more U.S. jobs through new exports than might be lost to growing imports. Texas has reaped huge benefits from trade with Mexico. (LaGesse 2) There have also been some mitigating factors involved in adding fuel to the fire of opponents of NAFTA. For instance, Mexico went into a deep recession only a year or so after NAFTA was passed. This had the effect of widening the trade surplus of Mexico with the U.S. as Mexicans were unable to buy American made goods while they continued to sell theirs in the U.S. To the credit of the drafters of NAFTA, the agreement does include side agreements created to protect labor rights and the environment, but critics contend no enforcement of these side agreements has been seen. However, where economics is concerned, the NAFTA agreement has actually breathed new life into moribund U.S. industries like the textile industry. The example of the textile industry shows a mutual benefit t

Category: Economics - N