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 1.5 million new jobs in Mexico. But most ofthese jobs pay only slightly higher that positions not related to NAFTA. (StateAppoints 10 Committees to Study Economic, Political, & Socioeconomic Impactof NAFTA on Mexico) Although NAFTA has produce 1.5 million jobs, they payso little that it does not increase the standard of living for Mexico. The economic impact of NAFTA sure does not seem too good. Jobs havebeen lost, wages have been decreased, US trade deficits have increased, andpromises were broken because of the failure to raise the standard of living inMexico. All of these prove why NAFTA has not been all that beneficial. Sociallyand culturally, NAFTA has not been all that great either. Think of the conceptof Canada becoming the 51st State. The magazines in Canada are mostly US and the magazines that are Canadian, contain American add in them. Also,Canadian television is not watched anymore because NAFTA allowed USstations in Canada. In Canada, there are many foreign influences. For instance, Canada is

swamped with American magazines. Most of the Canadian magazines containAmerican adds in them as well. The media in Canada is also swamped withAmerican television. Many Canadian families watch American television todaybecause of the free trade. NAFTA allowed US television companies tobroadcast in Canada. All three of these influences to one thing. Where has ourCanadian culture gone to. That is the question. If a person was asked to sayone TV station, they would probably say FOX, which is American. If a personwas asked to say one magazine brand, they would