Ferracuti (2000) defines the North American Free Trade Agreement (NAFTA) as a business treaty between Canada, Mexico, and the United States. The main reason for the creation of NAFTA was to eliminate any trade barriers between the member countries, such as tariffs. It is the biggest free trade treaty in the world, with the three countries having a Gross Domestic Product (GDP) of more than $20 trillion (Kennedy, 2005). Since the NAFTA treaty came into effect in 1993, debates on its advantages and disadvantages have heated up.
Concerns of NAFTA
One of the negative impact NAFTA brought to the United States is the loss of jobs of about 700,000 united states workers. States such as California, Michigan, and Texas usually conducted manufacturing jobs (Bugailiskis and Andrés, 2012). When NAFTA came into effect, Mexico was given the go-ahead of manufacturing products for the United States. Even though there are still manufacturing jobs along the borders, a massive number of united states workers suffered a permanent loss of job, and thus income. At the same time, the Mexican Agricultural Sector was destructed and millions of Mexican workers had to move to the United States labor market. Both the United States and Mexican economies suffered downward pressure because of the lower paying markets as well as less skilled labor. Out of the three members of NAFTA, the biggest loser appears to be Mexico, while America and Canada appeared to be the winners. Currently, Mexico sells more, about $60 billion more to the United States than it buys from it (Bugailiskis and Andrés, 2012).
Not only did NAFTA affect Mexico and America, but also the third member, Canada. Canada is characterized by being a resource-rich country and therefore has to trade. The trade will enable the Canadian citizen to buy products and services from the other NAFTA members, which itself cannot produce, or it can, at a much higher cost. However, the dependence of Canada on the United States is more than how the United States depends on Canada. As a result, the agreement has eroded the bargaining power of Canada and it has become vulnerable to unilateral American actions. The vulnerability of Canada made the 1987 Canadian Prime Minister Brian Mulroney make a decision of walking away from the treaty with the United States (Bugailiskis and Andrés, 2012).
However, with all the drawbacks of NAFTA, it does not necessarily mean that NAFTA has no benefits to the three countries. NAFTA is currently the biggest trading area, with more economic output that all the countries of the European Union. Furthermore, trade has quadrupled in the three countries, from about 300 billion to $1 trillion between 1993 to 2017. As a result, the economic growth, profit, and jobs for the three countries have been boosted economically (Gallagher, 2014).
Recommendation
To deal with the complaints of each country of each country, a solution to the problems of NAFTA should be created. Two alternative strategies can be put into effect. One has already been exercised but has produced the desired outcome. That is, NAFTA should provide a right to opt out of the agreement for each country. However, the problem with this is that Mexico, the United States, and Canada have become dependent of each other that disintegrating the agreement would create a massive dislocation, unemployment and even the dropping of standards of living. Another possible solution is to rewrite the NAFTA, so as the rights of the ordinary citizen can be protected and be kept as close as the current privileges of the corporate investors. It is easier said than one but when it succeeds, social justice to the global economy would result.
Work cited
Bugailiskis, Alex, and Andrés Rozental. Canada and Mexico's Unfinished Agenda. Montreal: McGill-Queen's University Press, 2012. Print.
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Ferracuti, A. Nafta. Parma: U. Guanda, 2000. Print.
Gallagher, Kevin P. Free Trade and the Environment: Mexico, Nafta, and Beyond. Stanford, Calif: Stanford Law and Politics, 2004. Print.
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Kennedy, Kevin C. First Decade of Nafta: The Future of Free Trade in North America. Ardsley, N.Y: Transnational, 2005. Print.
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