Economic Effect of NAFTA The purpose of this research is to discuss the N

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.

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mental degradation can be reasonably traced to NAFTA. Environmental officials state that the agreement will actually improve Mexico's environment and give Mexico more revenues to fund its own programs. As for retraining U.S. workers who have lost jobs after NAFTA is implemented, the retraining fund, according to past-President Bush's estimation, was up to $2 billion, so it does not seem likely that the new tax recently proposed on trade--which was supposed to be free (called the Gephardt tax)--would be needed. NAFTA is designed to eliminate all tariffs from the Yukon to the Yucatan over a 15-year period. While most experts agree that economic benefits will come more slowly for the United States than for Mexico, the United States will gain enormous benefits from the major steps Mexico has been taking away from socialist economics toward free-market, capitalist principles. Furthermore, in the first five years after implementation, the U.S. will have a net gain in employment of 175,000. U.S. exports to Mexico will increase $17 billion a year, and Mexico's exports to the United States will increase about $8 billion annually. And of course, all three countries involved will benefit by any increase in trade. Shellyn McCaffrey, d
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Approximate Word count = 2704
Approximate Pages = 11 (250 words per page)