The North American Free Trade Agreement (NAFTA)

    

    

NAFTA, The North American Free Trade Agreement, was signed in 1994. NAFTA is basically a free-trade agreement between: Canada, Mexico, and the United States. The idea behind it is to promote the North American economy and to protect the intellectual property rights of the businesses. Under the NAFTA, all non-barriers to agricultural trade between United States and Mexico were eliminated. In 1998, all tariffs related to agricultural trade between United States and Canada was removed. Between Mexico and Canada, most of the tariffs were eliminated within 15 years from the beginning of the NAFTA application.

            Certainly, one sector of the U.S. economy that has been affected the most by the NAFTA is the labor union. Almost all of the labor unions in the U.S. have opposed NAFTA because they fear that they would lose their jobs to the Mexicans because of lower wage rates there. Also, there is a trade deficit especially between United States and Mexico. Since 1994, there are many jobs destructed than jobs created in all 50 states. An increase in wages of the workers producing exports, but growing trade deficits have meant that the number of workers hurts by imports has exceed the number who have benefited through increased exports.
    
            In contrast of that, the agricultural sector of U.S.A has seen an overall positive effect with 22% growth of agricultural exportation to Canada and Mexico. It is also important when we look at the national GDP and how United States is a big player under NAFTA. U.S. GDP is 20 times larger than Mexico’s GDP and 10 times larger than Canada’s GDP.
           

However, Mexican economy benefited from NAFTA more than U.S.A and Canada.  First, Mexico growth into richer countries by the way the per-capita income increased. Second, the unemployment rate decreased progressively because American and Canadian industries moved and continue moving to Mexico. In addition, it increases foreign investment and exportation to Mexico. As it had some benefits, there are some inconvenient of NAFTA on Mexican economy. Mexico will probably lose much of its small businesses, because the trade barriers come down.