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NAFTA started up about 1994. Its purpose has been to reduce the costs of imports while trading between countries and increase the investments of goods. It is an agreement between North American countries. NAFTA created the world’s largest free trade area. It links about 550 million people. It’s so highly controversial. So Do the pros of NAFTA outweigh its cons?
My first Pro is that supporters of NAFTA usually point to lower prices for goods as one of the main things that lowered our tariffs. The typical American has profited as a result NAFTA. Lower prices are good for Americans’ budgets and increase our purchasing potential. Another pro of NAFTA is one that I saw from (CFR) The Council on Foreign Relations (CFR), NAFTA added 0.5% to the U.S. GDP once applied. That works out to billions of dollars to the GDP every year. Opponents may criticize the distribution of those extra billions, but looked at on the macro level, NAFTA seems to have grown the U.S. economy.
Now the cons.
Con 1: NAFTA led to the loss of U.S. manufacturing jobs.
NAFTA skeptics cite the loss of U.S. manufacturing jobs as a reason to criticize NAFTA and to be wary of future trade deals. According to the CFR, the U.S. auto sector lost roughly 350,000 jobs between 1994 and 2016. Many of those jobs were taken up by workers in Mexico, where the auto sector added over 400,000 jobs in the same period.
Those who mourn the loss of good-paying factory jobs for lower-skill workers in sectors like auto and textile manufacturing are not generally swayed by statistics that cite the NAFTA-induced growth in higher-skill jobs. These NAFTA critics argue that the U.S. should always have plenty of middle-class jobs for those without a college degree.
Con 2: NAFTA hurt the economic prospects of Mexican small farmers and small business owners.
Other criticisms of NAFTA look at the impact the trade deal has had on small farmers in Mexico, many of whom were unable to compete with larger agribusinesses in the wake of the agreement. Some of the country’s family-owned farms folded and farmers went to work in factories, where, critics argue, the workers had lower wages, less autonomy and inferior working conditions.
Con 3: NAFTA suppressed wages for non-college-educated workers in the U.S.
While the manufacturing sector of the U.S. economy suffered the heaviest job losses in the wake of NAFTA, wages decreased in many other sectors that don’t require workers to have a college degree. Competition from workers in Mexico, who earn lower wages than U.S. workers on average, exerted downward pressure on U.S. wages, too.
Con 4: NAFTA’s environmental and labor standards could have been higher.
When the U.S. makes trade deals with middle- or low-income countries, our negotiators tend to demand higher labor, environmental and intellectual property standards than those countries previously imposed. But critics of NAFTA say that the U.S. didn’t push hard enough for stringent protections for workers and the environment when negotiating the deal. Of course, those standards might change as the agreement is re-negotiated and adjusted in the years to come, but for now, opponents of NAFTA say the agreement missed an opportunity to promote the pro-labor and pro-environment agendas.
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