For the most part, all of the materials and the labor used to make finished goods must have originated in that country. What are some of the advantages and disadvantages of the agreement?
According to the Federal Reserve Bank of St. Louis' website, one "absolute advantage is the ability to do something more efficiently - with less labor or resources - than another country" Comparative. NAFTA also made the cost of producing lower by lowering the tariffs.
With respect to U. Producing at a lower cost gives a company higher profits and the competitive edge of setting prices below that of their competitors. NAFTA allows us to more cheaply attain labor and other resources from the countries in the pact, giving us the ability to produce goods at a lower cost.
However, what may seem good for big business is rarely good for the little guy. The Federal Bank of St. Louis also states that, "international trade does not benefit everyone. In particular, low-skill U. An agreement of this magnitude and that spans this large a land mass, will have major impacts on all the countries.
Let's keep on the subject of unemployment. According to The John F. Henning Center for International Labor Relations:. While labor and environmental groups argue that while NAFTA has enriched international corporations, it brought little benefit to workers or the environment. Americans lost , jobs to Mexico, while Mexican wages dropped.
Also says that, "many workers are temporarily sometimes permanently unemployed by changes in industry structure" Negatives. On the environmental side of the coin, " in the name of removing barriers to free trade, corporations have used the system to challenge environmental and public health regulations in all three NAFTA countries" Deepening.
Page 1 of It states that the purpose of the agreement is to: Henning Center for International Labor Relations: John Americans lost , jobs to Mexico, while Mexican wages dropped.
On the other hand, the idea of the introduction of the common currency for member states of NAFTA was rejected for now because it could deteriorate the financial position of the US and it could raise a number of financial and economic problems. The introduction of the common currency would raise not only economic but also political issues because the national currency is viewed by many as a symbol of independence.
Moreover, such initiatives apparently threaten to the independence of national economies and such close integration eliminates national frontiers and makes member states too dependent on each other. As it has been already mentioned above, outsourcing contributed to the rise of the unemployment rate in the US.
If Americans suffered from outsourcing that provoked unemployment than Mexico and partially Canada faced the problem of the inability of their small and medium companies to compete with large multinational corporations based in the US.
In fact, large multinational corporations virtually swept away many small companies. As a result, many businesses in Mexico and Canada ran bankrupt that also increased the social tension for former businessmen had to look for new jobs but there were a few offers that met their qualifications and ambitions.
The growing flow of immigrants from Mexico to the US and Canada is one of the main effects of NAFTA because the agreement encouraged the free movement of goods, capital and people between member states. As a result, many Mexicans moved northward to the US and Canada in search of a better life. Immigrants increased the competition in the local labor market that aggravated the economic situation and increased the social tension. In response to the growing immigration many Americans insisted on the change of immigration laws to stop the flow of immigrants from Mexico.
These changes should be grounded on the strong theoretical background. The gradual evolution of economic theories of the international trade over the previous centuries has resulted in the creation of different international unions. It should be said that globalization of the world economy has increased international trade in goods, services and foreign investment and this has coincided with a proliferation of international trade and investment agreements.
Neoliberalism supports the development of free trade and NAFTA contributes to the development of free trade and liberalization of economic relations. Neoliberalism stands on the ground of the minimal intervention of the government in the economic development and business activities. In such a context, the development of international trade is beneficial for the economic development of countries. In stark contrast, the further economic integration that is supported by Neoliberals may aggravate the economic development of countries and the position of a larger part of the society in member states.
What is meant here is the fact that the further integration of member states would be a reasonable step in terms of the Neoliberal approach to economy. The further economic integration would mean the aggravation of existing problems, such as growing unemployment and high immigration rate that would lead to the depopulation of Mexico, removal of hazardous production facilities to Mexico, the replacement of local small business by large American and Canadian multinational corporations. On the other hand, the US and Canada would face the growing flow of immigrants from Mexico and outsourcing of many productions from the US and Canada to Mexico.
To put it more precisely, the free trade is the natural part of the capitalist economic development, when the accumulation of capital leads to the further expansion of large companies and severe exploitation of employees. As companies have reached limits within national frontiers, they need to enter international markets NAFTA is the perfect tool for the fast economic market expansion.
Large multinational corporations penetrate new markets and establish their control taking the leading position and striving for the monopolization of the market. As a result, large multinational corporations take control over a larger part of the economy of member states that is the case of large corporation in the US, Canada and Mexico after the implementation of NAFTA. In such a situation, the introduction of restrictions in terms of NAFTA is essential for the prevention of the further growth of control of large corporations over national economies.
The supporters of the idea of diminishing the NAFTA agreement indicate that the jobs losses caused serious harm for the US and therefore this and other free trade agreements are rather negative factors for the country: Since labor is cheaper in Mexico, many manufacturing industries moved part of their production from high-cost U. Between and , the U. However, , occurred after , and could have been a result of the financial crisis. California, New York, Michigan and Texas were hit the hardest because they had high concentrations of the industries that moved plants to Mexico.
These industries included motor vehicles, textiles, computers, and electrical appliances. On the other hand, restrictions in terms of NAFTA would change the essence of the agreement and lead to the consistent change of the agreement.
- NAFTA and Maquiladoras The North American Free Trade Agreement (NAFTA), which became effective on January 1, , is a comprehensive, rules-based agreement designed to promote “free-trade” among the United States, Mexico and Canada (NAFTA Forum,).
The North American Free Trade Agreement (NAFTA) Congressional Research Service agenda with shared values and generate economic growth. Some opponents argue that the agreement has caused worker displacement, and renegotiation could cause further job losses.
International Business: North American Free Trade Agreement Overview History of NAFTA. In January of , the United States, Canada, and Mexico entered into the North American Free Trade Agreement (NAFTA or the Agreement), and in so doing created the largest free trade zone in the world. Free research papers, free research paper samples and free example research projects on NAFTA topics are plagiarized. b2bproxy.cf is professional research paper writing service which is committed to write top-quality custom research papers, term papers, essays, thesis papers and dissertations.
North American Free Trade Agreement (NAFTA) is one of the most influential international agreement between the US, Canada and Mexico that defined the economic, social and political development of the three countries and North American region. North American Free Trade Agreement Research Papers North American Free Trade Agreement is the most important and expansive trade agreement ever created and is the largest free trade zone in the world. This is a research paper on the North American Free Trade Agreement.