fbpx

Positive And Negative Effects Of The North American Free Trade Agreement

NAFTA has created winners and losers. If you think the trade agreement has resulted in a net loss to the United States, you probably refuse it and similar agreements. If you think NAFTA has generated a net benefit to the economy, you could support NAFTA, even if you criticize parts of the agreement. Wherever you are, it`s worth remembering that the trade flows that can be attributed to NAFTA pale in comparison to U.S. trade with China, and the impact of NAFTA on the U.S. economy as a whole has been relatively small, although some communities have really felt pain. Critics say the movement to link trade and workers` rights is an arrogant attempt by labour movements and inefficient industries in developed countries to impose their labour standards on other countries. As I said before, that is not the case. Almost all countries, including the United States, Canada and Mexico, accepted the ILO`s goals when they joined the organization. Moreover, Mexico`s labour laws are, in many ways, superior to those of the United States. Indeed, in a more competitive global economy, it will, by default, allow countries that exploit their workers to impose their standards on others if they fail to adopt enforceable standards. In other words, we give the right to set our own standards if we do not regulate goods that arrive in the United States.

Indeed, one of the fundamental principles of highly competitive markets seems to be that poor standards tend to drive away the good. Competitive markets make it difficult for employers who want to have good standards to do so, even if it is possible, in the long run, to show that good work practices improve economic efficiency. When Bill Clinton signed the nafta law in 1993, he said the trade agreement signed “jobs.” U.S. jobs and well-paying American jobs. His independent opponent in the 1992 elections, Ross Perot, warned that fleeing jobs across the southern border would create a “great wake.” Given that people with lower incomes spend more of their income on clothing and other products cheaper to import than within the country, they would probably suffer the most from a towards protectionism – like many of them through trade liberalization. According to a 2015 study by Pablo Fajgelbaum and Amit K. Khandelwal, the average real income loss due to the complete closure of trade would be 4% for the top 10% of the American population, but 69% for the poorest 10%. Critics also argue that Mexico`s lax application of labour standards is due to insufficient resources and not a lack of will.