First of all, it must be noted that NAFTA (the North American Free Trade Agreement) is recognized to be one of the most important trade agreements the USA ever concluded. There is a wide range of goals NAFTA created; although the most significant involve eliminating obstacles to trade, increasing integration and cooperation in order to create appropriate working conditions in North America, creating the richest trade market to produce a variety of goods and services in North America, establishing beneficial trade rules, and creating appropriate conditions to expand international cooperation. Many consumers care about NAFTA due to several reasons; thus, as far as trade is considered to be free, there are no limitations on various commodities, and there are supply and demand prices on goods and services depend upon. However, some obstacles cannot be neglected, as they affect the cost of the product. For instance, there are certain non-tariff obstacles, quantity limitations, etc. These and many other barriers prevent and slow down the open movement of goods and services.
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When speaking about the advantages NAFTA provides its consumers with, one can probably state that the most evident benefits include the marketplace economic stability, improved safety standards, and improved quality products. Furthermore, people have an opportunity for greater choices. The benefits NAFTA provides U.S. businesses should also be taken into account. These involve larger investment opportunities, a variety of effective ways to resolve certain contradictions in relation to trade, larger market access, elimination of tariffs, and improved conditions for goods and services cross-border movement. The impact of the NAFTA on U.S. jobs is also considered to be of particular concern, as “In 1996, jobs supported by the export of U.S. goods to Mexico and Canada increased by an estimated 311,000 to 2.3 million from 1993 (pre-NAFTA)” (“The North American Free Trade Agreement” par. 7). Agricultural trade, automotive industry, and textiles and apparel are the industries, which underwent significant benefits due to a well-known regional trade agreement. The impact of the NAFTA on the environment should also be taken into account, as the NAFTA partners care about a wide range of environmental issues. For instance, NAFTA is deeply concerned with reducing toxic chemicals and pesticide emissions, banning chlordane, etc. Generally, it should be noted that “In response to increasing environmental awareness, NAFTA became the first international trade agreement in United States history to include environmental policies” (“NAFTA and its Impact on the United States” 4).
When discussing the impact of the NAFTA on the countries’ areas of agriculture in detail, one can state that the participants of the agreement greatly benefited from the open trade. Keeping in mind certain historical data, one can probably remember that the agricultural industry was of particular concern, as it was a government-protected industry. Thus, the number of imports was restricted by many barriers; supply instability was associated with unregulated agricultural prices. So, it seems to be evident that the NAFTA affected the countries’ agricultural sectors in a positive way. On the other hand, substantial long-run negative effects cannot be ignored, as when common barriers to trade were eliminated, other countries’ competitive advantage was undermined. Despite the fact that the NAFTA had both – positive and negative effects in relation to the USA, positive impacts are more important as compared with negative ones. For instance, Mexico’s economy recovered due to U.S. agricultural exports.
An improved transportation system can also be regarded as one of the advantages NAFTA brought about. Increased supply of agricultural products required better transportation; so, the NAFTA provided Mexico and the USA with an opportunity to supply products in a fast way. Among a variety of the negative consequences, the NAFTA caused, a decrease in labor supply was one of the most substantial. However, the problem did not touch upon the agricultural industry; on the contrary, there was a slight increase in employment in this area of the countries’ economy. For this reason, one can probably notice that the textile industry also did not suffer much, as a decrease in labor supply was balanced by the effects of the agricultural sector.
Generally, it should be noted that the effects of the NAFTA on environmental and food quality issues can be regarded rather ambiguously. For instance, policies regarding food quality were not the same in the USA and Mexico; that is why agricultural changes led to certain environmental problems in the United Mexican States. The USA, in turn, did not experience negative effects, as its environmental policies were well developed as compared with Mexico. On the other hand, certain laws were established by NAFTA in order to improve the quality of products as well as to open new areas for trade. The most important positive effect the NAFTA brought about was that it gave an opportunity to unite North America in both – economical and social ways. Thus, William J. Kehoe states that.
As the world’s largest trilateral trade relationship, NAFTA is of profound economic and social consequence. It is a trading bloc of size, wealth, and potential heretofore unknown in the world. The NAFTA countries are a massive combined market of 370 million people, with an estimated Gross Domestic Product of U.S.$6.2 trillion, compared to the European Community’s 325 million people and estimated Gross Domestic Product of U.S.$4 trillion (par. 9).
Keeping in mind Kehoe’s words, it becomes clear that NAFTA makes the process of cooperation easier. It gives an opportunity to reduce the gap between poor and rich nations. Its provisions seem to liberalize trade between trading partners. Manuel Sánchez and Nathaniel Karp are of the opinion that “NAFTA has significantly contributed to expanding FDI, trade, employment and output” (38).
The problems the North American Free Trade Agreement caused can be divided into two categories. These involve problems affecting employment (worker displacement, loss of a job, loss of industry) and problems, which are associated with certain environmental issues.
When discussing the NAFTA’s future influences, the following points should be taken into consideration: thus, they say that growth of industries will lead to an increase in exports; political and economic situation in Mexico will be improved; the NAFTA will form a wide range of new trading groups and stimulate U.S. investment in Mexico.
Finally, it is necessary to state that the effects of the NAFTA must be mostly regarded from the positive perspectives. The North American Free Trade Agreement improved the countries’ economic and social situation; food processing and agricultural sectors also benefited from the trade agreement. Dale Colyer specifies that “the NAFTA approach to the environment has helped assure that environmental issues will receive greater emphasis than would have occurred without the NAFTA side agreement” (11).
Colyer, Dale. “Environmental Impacts of Agricultural Trade Under NAFTA.” Umn.edu. n.d. Web.
Kehoe, William. “NAFTA: Concept, Problems, Promise.” Virginia.edu. 1995. Web.
“NAFTA and its Impact on the United States.” Iastate.edu. 2004. Web.
Sánchez, Manuel, and Nathaniel, Karp. “NAFTA’s Economic Effects on Mexico.” Umn.edu. 2000. Web.
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“The North American Free Trade Agreement.” Unt.edu. n.d. Web.