Answer:
Trade is important in an increasingly globalized world, and it is important to minimize trade barriers and restrictions between trading countries. NAFTA was created with the goal of eliminating most tariffs and restrictions on trade between the United States, Mexico, and Canada. NAFTA removed import tariffs in industries such as agriculture, textiles, and automobiles. The agreement provided for intellectual property protection, established dispute-resolution mechanisms, and contained regional labor and environmental safeguards.
NAFTA has helped boost intraregional trade and has stimulated economic growth. According to the Council on Foreign Relations, “Intraregional trade flows have increased significantly over the treaty’s first two decades, from roughly $290 billion in 1993 to more than $1.1 trillion in 2012. Much of this growth has been due to increased trade between the United States and Mexico, where the trade balance—the difference between exports and imports—swung from a $1.7 billion surplus in 1993 to a $61.4 billion deficit in 2012.”
Auto manufacturers and producers of electronics, machinery, and appliances in the three countries benefitted from NAFTA as this agreement helped spread production lines across each country, which significantly reduced production costs. Reduced production costs have had a positive impact on consumers because the cost reductions led to lower prices for goods.
The Council on Foreign Relations also stated that, because of NAFTA, per capita income rose by 1.2% over the last two decades in Mexico, which is a major boost for Mexico’s economic growth. Moreover, agricultural trade between the United States and Canada increased because of NAFTA. Increased agricultural exports to Canada have helped US farmers.
However, I think there are some shortcomings to this agreement. I believe that trade liberalization would have occurred even without NAFTA. US trade with Mexico was growing before implementation of NAFTA. Considering the change in growth numbers, I believe that NAFTA had minimal impact on US GDP.
Wages in the export industry are on par with labor productivity. However, income inequality is a growing issue in our economy.
Some critics believe that agriculture in Mexico is overshadowed by the highly mechanized and subsidized farming industry in the United States. However, the fact is that Mexican exports to the United States have tripled over the years.
Implementing more policies such as strengthening protections for workers and the environment, enhancing regulatory cooperation, investing in border infrastructure, and promoting research and development to improve the competitiveness of North American industries would help achieve the goals of NAFTA completely.
Explanation:
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