NAFTA, the North American Free Trade Agreement

Essay by Anonymous UserUniversity, Bachelor'sA-, May 1996

download word file, 7 pages 3.3


        I believe that the North American Free Trade Agreement was an inevitable step in the evolution of the United States economic policy. The globilization of the world economy due to technological advances in computers and communications have shrunk the world to the point where no single country acting alone can effectively compete on the foreign market. Even the United States, with its vast resources, can not have an absolute advantage in all thing that it produces. It does not have unlimited factors of endowments and must do its best to make these available to the companies within its borders.

        There are two basic sides to the argument over the North American Free Trade Agreement. The Pro-NAFTA side views the treaty as a way to provide a large, efficient production base for the entire geopolitical area. This would result in lower cost to consumers and an increase in exports to Mexico and Canada.

The multiplier effect would then take place producing growth in all areas. The Anti-NAFTA group feels that Mexico will be an unequal partner due to the lower wage rates of the Mexican populace, causing the loss of thousands of jobs in the United States and Canada. Environmentalist fear that pollution will spread across the continent. Farmers fear that produce grown in Mexico will be contaminated from pesticides banned in the United States. These are but a few of the arguments for and against NAFTA.

What does NAFTA mean

        A Free Trade Area is, by definition, an area where all barriers to trade are lifted. This is not the case with regards to NAFTA at this point. Currently most of the trade barriers between the United States and Canada are lifted but those with Mexico have largely been kept in place. This is an obvious disparity on the...