The Bad Effects Of The North American

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The Bad Effects Of The North American Free Trade A Essay, Research Paper THE BAD EFFECTS OF THE NORTH AMERICAN FREE TRADE AGREEMENT Free Trade, interchange of commodities across political frontiers withoutrestrictions such as tariffs, quotas, or foreign exchange controls. Tariff, a taxlevied by a government on imports and exports. Foreign Exchange, currencyand money claims, such as bank balances and bank drafts, expressed in theequivalent value in foreign money. North American Free Trade Agreement(NAFTA), a pact that calls for the gradual removal of tariffs and other tradebarriers on most goods produced and sold in North America. NAFTA becameeffective in Canada, Mexico, and the United States on January 1, 1994. NAFTAforms the world’s second largest free-trade zone, bringing

together 365 millionconsumers in Canada, Mexico, and the United States in an open market. Looking into a greater depth, it is noticed that NAFTA is not all that great. Economically, many jobs have been lost, wages have dropped, and trade deficitsdecreased in the United States due to NAFTA. NAFTA also promised to raisethe standard of living in Mexico but failed. Socially/Culturally, Canada hasbecome the 51st state . Magazines in Canada are mostly U.S. or contain U.S.ads. Canadian television is not watched as much any more because everyonewatches U.S. stations. Environmentally, the US / Mexican border has become avirtual cesspool. There are many repercussions of increased activity creatinghazardous waste. NAFTA opened the US borders to trucks that do not meet USsafety standards.

There has been many birth defects due to NAFTA, andNAFTA weakened safety inspections. All of these points prove one thing. Looking at the economic, social/cultural, and environmental impact, it is visiblethat NAFTA has not been beneficial, but in reality very unfavorable. Looking at the economic impact of NAFTA, it is visible that it is notbeneficial to the US. Many jobs that were in the United States, have moved toMexico. So many corporations chased lower wages to Mexico that America haslost about 420,000 jobs and as our factories close, the impact on localeconomies and tax revenues is hurting small businesses, hospitals and entirecommunities. (Internet) (see figure 2, next page) The cost to work in Mexico ismuch lower than the cost in the US so the companies are moving to

Mexico.They may save some money but the amount of job losses impacts the UScommunities immensely. Wages in the United States have decreased. Imports from low wagecountries, creates a high wage inequality. In a recent NBC/Wall Street Journalpoll, 58% of those surveyed have hurt wages and cost jobs. (Not happy afterNAFTA) These people are right. Once again, it is seen that is cheaper inMexico to run a business, so companies are moving there as quick as they can. Due to the fact that it is less expensive to run a business in Mexico, it isless expensive to import from Mexico. The United States has imported manymore products to Mexico that they have exported. The United States had amodest merchandise trade surplus with Mexico in 1993 and 1994, on the orderor $2 billion each year. In

1995 and 1996, this surplus shifted to a deficit ofaround $16 – $17 billion each year, as U.S. imports of Mexican goods outpacedexports to Mexico. (Internet) (see figure 1, page 4) It is clearly noticeable thatbecause of NAFTA, the United States has this huge deficit. It was also predicted by Gary Clyde Hufbauet and Jeffery J. Schott that NAFTA would in fact create ahigher surplus of around $7 – $9 billion each year and in reality it was turned intoa deficit of $16 – $17 billion each year. (see figure 3, next page) When NAFTA came into effect, a promise was made to increase thestandard of living in Mexico, but failed. Critics also point out the agreement hasfailed in its goal to create sufficient jobs in Mexico to help raise the standard ofliving…..NAFTA has created about