This paper will discuss the possible impact of the North American Free Trade Agreement upon employment in the United States. The paper will examine the effect of NAFTA on the number of jobs in the U.S., particularly looking at the charges that it will result in a transfer of jobs from the U.S. to Mexico. According to most independent studies, NAFTA will not result in a large exodus of jobs from the U.S., but will probably result in an increase.
The North American Free Trade Agreement (NAFTA) is designed to create an open and common trading zone between the United States, Mexico, and Canada. The United States and Canada already have such a zone under the U.S.-Canada Free Trade Agreement (CFTA), which went into effect in 1989. Under NAFTA, all three countries will have to phase out tariffs and other trade barriers over a period of fifteen years. 99% of these tariffs will be eased out during the first ten years, while tariffs on politically sensitive products will be eliminated by the end of the fifteen year period. Almost all import quotas and licensing requirements will be eliminated and all three countries will be forced to give equal treatment to each other's agricultural products when establishing marketing orders. Consequently, U.S. restrictions on apparel and Mexican limits on imported cars and trucks will fall, while bilateral free trade will be created in most farm products (Morici, 1993, p. 50).
The biggest controversy concerning NAFTA is over its effect on U.S. jobs. Opponents argue that it will result in a massive loss of U.S. jobs, with corporations moving operations to Mexico in order to take advantage of the low wages in that country. Proponents, on the other hand, argue that NAFTA will actually create many new jobs in the United States as Mexico is opened up to U.S. goods. This increased demand will require U.S. corporations to expand their operations in the U.S.; goods will continue to be made in the U.S. ...