Pros And Cons Of NAFTA
The North American Free Trade Agreement “eliminated most tariffs on goods traded between the nations, and set in place processes to get rid of regulatory and other barriers.” There are many benefits of this agreement, such as increasing trade, lowering prices, and increasing foreign investment. However, there are also disadvantages including the loss of domestic jobs which led to suppressed wages. From an economic perspective, I recommend that the United States remain in NAFTA due to its various advantages, nevertheless the modifications need to reflect the best interests of this country and fix the economic downsides it has already caused. Implemented in 1994 by former president George W. Bush, the main idea of NAFTA was that a company in the states could do business with a firm in Canada as easily and efficiently as it did with a firm in America. This idea still
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Since NAFTA waived tariffs, the United States imports Mexican oil for a cheaper price. Due to the cheaper price of oil, food can be transported for lower costs which reduces grocery bills and farm product costs. Foreign investment has also grown more rapidly. The stock of U.S. foreign direct investment in Mexico rose from $15 billion to more than $107.8 billion in 2014. Engaging in foreign direct investments increases capital which creates a higher output and jobs. Additionally, the U.S. can benefit from improved knowledge which can help tap into domestic markets. In spite of all the benefits NAFTA has to offer, there are still some economic issues that can not be overlooked. One of the main concerns that caused a potential renegotiation is due to the loss of American jobs. Companies in certain industries, like automotive, textile, and manufacturing jobs relocated to Mexico in search for cheaper labor, thus causing a loss of 500,000-750,000 U.S. jobs. Because of this migration, U.S. workers could not bargain for higher wages thus leading to wage
Since NAFTA waived tariffs, the United States imports Mexican oil for a cheaper price. Due to the cheaper price of oil, food can be transported for lower costs which reduces grocery bills and farm product costs. Foreign investment has also grown more rapidly. The stock of U.S. foreign direct investment in Mexico rose from $15 billion to more than $107.8 billion in 2014. Engaging in foreign direct investments increases capital which creates a higher output and jobs. Additionally, the U.S. can benefit from improved knowledge which can help tap into domestic markets. In spite of all the benefits NAFTA has to offer, there are still some economic issues that can not be overlooked. One of the main concerns that caused a potential renegotiation is due to the loss of American jobs. Companies in certain industries, like automotive, textile, and manufacturing jobs relocated to Mexico in search for cheaper labor, thus causing a loss of 500,000-750,000 U.S. jobs. Because of this migration, U.S. workers could not bargain for higher wages thus leading to wage