The purpose of this research is to discuss the North American Free Trade Agreement (NAFTA) and its effect on the U.S., Canadian, and Mexican economic scene. This paper takes a position supporting NAFTA.
In August, 1992, negotiators from the United States, Mexico, and Canada met at Washington, D.C.'s Watergate Hotel and agreed on this historic free trade pact. This agreement, however, still needs to be ratified by Congress. Many experts think this agreement will lead to a loss of U.S. jobs. Other analysts think it will pollute the environment, but in the long run it looks like the trade agreement will have a positive effect on the U.S. economy. Building on a 1988 market-opening accord with Canada, NAFTA will remove tariffs and other barriers to create a $6 trillion market of 363 consumers. Exports to Mexico, already America's third largest customer, could increase tremendously ("A Free-Trade Milestone" 30-31).
Taking advantage of low wages--a tenth of what the average U.S. worker makes--U.S. companies could cut their labor costs and have an edge over their European and Japanese rivals. NAFTA would make U.S. companies more competitive everywhere in the world. This is not to say that there would not be problems concerning this agreement. There will be job shifts, and certain environmental controls need to be added. The most sensitive issues are the auto and agriculture industries, and access to Mexico's protected energy market.
The United States, during the negotiations, wanted stiff rules against Japanese auto makers taking Japanese-made parts to Mexico and then sending finished cars into the U.S. market from there. The final compromise, which required 62.5 percent North American content, disappointed the big three automakers in the United States. Ford Motor Chairman Harold A. Poling was concerned because the agreement did not require 65 percent automotive rule of origin.
Mexican negotiators also resisted U.S. p...