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Pros and cons of NAFTA

There are pros and cons to the Northern American free trade agreement(NAFTA). The North American free trade was the world’s most comprehensive free trade agreement when it was enacted in 1993. It covered the United States, Canada, and Mexico. Its member economies will create around $26.67 trillion in GDP in 2020. The pros of NAFTA are that it lowers import costs and provides new opportunities and jobs. The cons of NAFTA are that sometimes poor working conditions and negative environmental impact. So here are the 14 pros and cons of NAFTA. 

Here are the listed of top 7 pros of NAFTA:

  1. Lower import cost
  2. Increased Commerce
  3. More trade
  4. It offers national goods
  5. Created Jobs
  6. It opens up new opportunities
  7. NAFTA helped government spending

Here are the listed of top 7 Cons of NAFTA:

  1. Lower wages
  2. Manufacturing employment losses
  3. Poor working conditions
  4. Hurt Mexican Farmers
  5. Decreased truck safety
  6. Poorly Implemented regulations
  7. Negative environment impact

Top 7 Pros of NAFTA:

First of all, let’s have a look at the pros of the NAFTA and these are as follows:

Lower import cost:

Traffic reduction on various products in Canada, Mexico, and the united states has helped consumers and businesses.

Increased Commerce:

NAFTA more than tripled trade between Canada, Mexico, and the united states. Traffic was decreased and eliminated as part of the agreement.

More trade:

One of the most significant NAFTA achievements has been an increase in trade among the three countries. Exports from Canada and Mexico to the united states increased by 192%, while exports from the united state to Canada and Mexico soared by 201% and 370%, respectively.

It offers national goods:

It was one of the treaty’s requirements that all items imported from the united states, Mexico, and Canada be designated as national goods so eliminating duties on those goods. Customs duties will also be abolished.

Created Jobs:

NAFTA’s greater generated jobs. According to a 2010 estimate, 5.4 million employment were directly supported by US free trade agreements, the vast majority of which from NAFTA. 17.7 million employment was also supported through trade with these countries.

It opens up new opportunities:

NAFTA has created new chances for small and medium firms to make a reputation for themselves, whether in the united states or Mexico. This means that smaller businesses can now establish and operate offices in Mexico. With the elimination of traffic, it is now expensive for smaller firms to try their luck in the Latin-speaking country.

NAFTA helped government spending:

NAFTA aided government contracts from each country becoming available to suppliers in all three member countries. This encouraged competitiveness while decreasing expenses.

Top 7 Cons of NAFTA:

Now let’s discuss the cons of NAFTA and these are as follows:

Lower wages:

Wages have fallen as a result of job relocation. To prevent workers from forming unions, 12 companies threatened to relocate to Mexico. Workers could not bargain for higher salaries in the absence of unions. This method is so effective that it became standard operating procedure in a variety of sectors.

Manufacturing employment losses:

Manufacturing jobs in America have been declining since 1994. Although migration of production to china and India accounts for a significant portion of that trend, many American corporations have also relocated production south of the border. California, New work, and Texas were the hardest hit states in terms of manufacturing job losses.

Poor working conditions:

Unemployed Mexican farmers went to work in the maquiladora program in subpar conditions. Maquiladoras are locations near the border where US-owned businesses hire Mexican employees. They assemble things at a low cost for export back to the united states. In 2006, 1,2 million people worked in maquiladoras.

Hurt Mexican Farmers:

The influx of wheat and beef from the united states has lowered Mexican farmers’ market share as well as government subsidies.

Decreased truck safety:

NAFTA gave Mexican truckers access to the united states, which reduced truck safety. Mexican trucks are not subject to the same safety requirement as American ones. This provision was delayed and never fully implemented, while the united state did offer a pilot program for Mexican trucks to operate temporarily in the united state.

Poorly Implemented regulations:

Some NAFTA-related regulations are not being followed. For example, there have been reports in the united states of Mexican trucks crossing the border and exceeding the house of representatives 20-mile commercial zone is not permitted in Mexico due to size limits enforced south of the border.

Negative environment impact:

Critics of NAFTA believe that the able deal has put pressure on Mexican farmers, in particular, to compete with American products, resulting in a significant increase in the use of fertilizers and other chemicals. According to a report related to the 20th anniversary of the North American free trade agreement, greenhouse gas emissions in the region increased from 7 billion metric tonnes in 1990 to 8.3 billion in 2005. The paper also connects NAFTA to deforestation and unsustainable water use.

Thank you for reading this article. If you have any queries regarding our article on the Pros and cons of NAFTA then do comment in the comment section below.

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Divya Chauhan
Divya Chauhan is an expert writer with 10+ years of experience as a content writer. They specialize in making complex topics like IT, Health, and general topic easy to understand. Divya has written over thousands of articles to help people with their content. Prior to joining Way2benefits’s editorial team in 2020, Divya worked as a Professor of BCA college and freelancer blogger.