Chris Wright: NAFTA Pros and Cons

The North American Free Trade Agreement (NAFTA) is a trade agreement between the United States, Canada, and Mexico. The idea behind NAFTA was to open free-trade amongst the three countries which would eliminate tariffs and taxes on goods and services. Leaders of the countries promised an increase in jobs, living standards, and cheaper goods. Now in its fifteenth year, NAFTA is largely seen as a failure by organized labor because jobs have decreased instead on increasing as promised, living standards have become stagnant, while goods and services have remained neutral. Supporters of NAFTA argue that trade between the countries have increased productivity by enabling the specialization of certain goods especially in the agricultural sector. Additional supporters such as manufacturing companies are in favor of NAFTA and argue that moving jobs to other countries such as Mexico that employs cheaper labor is necessary to remain competitive in the global market place.

Organized labor strongly opposes NAFTA mostly because of the loss of manufacturing jobs within the United States. Trade unions such as the United Auto Workers (UAW) and the United Steel Workers (USW) claim that close to a million jobs have been lost due to NAFTA because many manufacturing jobs have been relocated to Mexico and Canada. For example, a Borg Warner plant in Indiana which makes auto parts for Ford’s F-150’s and employs five hundred UAW workers is shutting down this month and relocating to Mexico. Members of the union claim that the Borg Warner is using NAFTA to “destroy the union.” Most of the job losses have been suffered by the auto industry but is hardly the only sector to be effected. The technology sector has seen many job losses as companies have shut down factories in the US and moved them to Mexico. Technology giants such as Intel and IBM have used NAFTA to shut down their factories and build new ones in Mexico where they can take advantage of cheaper labor.

On the other hand, supports for NAFTA insist that the productivity has increased along with keeping prices down for US consumers. Perhaps the agricultural sector has gained the most from NAFTA by enabling the specialization of certain goods. Exports of corn, beef, and oranges have benefited US farmers and ranchers considerably by eliminating tariffs and taxes which used to have a drain on profits. While agricultural imports such as broccoli, cucumbers, and sugar remain cheap to the US consumers which allows American farmers to focus on more profitable exports to other countries. Manufacturers such as General Motors and Intel strongly insist that using the cheap labor in Mexico is necessary to remain competitive amongst their competitors. For example, GM claims that they cannot compete against Japanese auto makers which pay their non-union American workers lower wages and benefits. Therefore, by moving jobs to Mexico where labor is cheaper allows them keep costs down and provide cheaper products for consumers. Lastly, the Huffington Post suggests than NAFTA will be a valuable tool in solving the US’s energy needs by allowing cheap oil to be imported from Canada. In the last six years Canada has surpassed Saudi Arabia as the largest exporter of oil to the US. The article notes that over a thousand jobs will be created in the US with a proposed oil pipeline running from Canada to the refineries in Philadelphia. No one can argue that cheaper oil will benefit all American’s and help secure energy independence.

Thus, NAFTA has become a contested issue here in America which has benefitted some but has hurt others. Labor unions strongly oppose NAFTA because of lost jobs and opportunities for American workers. Likewise, NAFTA has increased profitability for American farmers and has helped to keep food prices down. Many manufacturers have eliminated many US jobs, but the companies maintain that moving their factories to cheaper labor markets allows them to remain competitive against foreign companies who use even cheaper labor.


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Sources:
“And Then Came NAFTA . . .” Free Online Research Papers. http://www.freeonlineresearchpapers.com/and-then-came-nafta (accessed April 18, 2009).

“A Small and Dangerous Spat.” New York Times.com. http://www.nytimes.com/2009/03/19/opinion/19thu2.html (accessed April 18, 2009).

Faux, Jeff, Carlos Salas and Robert E. Scott. “Revisiting NAFTA: Still Not Working for North American Workers.” Economic Policy Institute. http://www.epi.org/publications/entry/bp173/ (accessed April 18, 2009).

Francis, Diane. “NAFTA: America’s Energy Solution.” Huffington Post. http://www.huffingtonpost.com/diane-francis/nafta-americas-energy-sol_b_107002.html (accessed April 18, 2009).

Lee Thea M. “NAFTA at Year Twelve.” American Federation of Labor and Congress of Industrial Organizations. http://www.aflcio.org/issues/jobseconomy/globaleconomy/upload/LeeTestimony2006-0911.pdf (accessed April 18, 2009).

Moroski, Christine. “An Excuse to Destroy Unions?” Solidarity. http://www.uaw.org/solidarity/08/0408/feature03.php (accessed April 18, 2009).

“NAFTA at 13.” BNET. http://findarticles.com/p/articles/mi_m0EUY/is_17_13/ai_n27225272/?tag=rbxcra.2.a.11 (accessed April 18, 2009).

“The Issue: NAFTA.” Economy in Crisis. http://www.economyincrisis.org/articles/issues?i=NAFTA&gclid=CP2s686p_pkCFcZM5QodjgnBGQ (accessed April 18, 2009).

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