The influence of NAFTA

The influence of NAFTA

12H2013 Yukino Ebina

        

           In these days, many countries are trying to combine with others in economics because it is essential to create much benefit and poverty. Thus there are a lot of regional communities across the border. Especially, NAFTA has the powerful influence not only North America but also all over the world. NAFTA is the treaty that was concluded among Canada, the U.S. and Mexico. These countries started to negotiate about the agreement in 1994 and it had spent 14 years to be implemented. The treaty eliminated the tariff to trade their products. The arrangement was admired most of areas. In 1993, the amount of the trade was $290 billion among three countries. Thanks to the treaty, it increased more than $1.1 trillion in 2012. It is said that The U.S. trades more in goods and services with Mexico and Canada than it does with Japan, South Korea, Brazil, Russia, India, and China combined.  This result shows the business within NAFTA occupies large part of the whole trade in three country. The treaty contributes to revitalize the trade among these countries.

              Though this agreement acts on promotion of the trade, it also causes harmful influence to the external economy for both countries between the U.S. and Mexico. For instance, many companies in the United States have moved to Mexico because they prefer cheaper labors. It is because the treaty allows them to be multinational companies and expand their business across the border. This moving causes about 700,000 jobs loss in the U.S. Furthermore, these corporations force their labor to agree being cut the wage. The companies threatened workers to relocate to other countries if they were not obey cutting their salary down. These corporations also frighten the local government to reduce their tax as the same reason. In these points, the treaty is profitable for the multinational companies. On the other hand, the agreement is disadvantage for the small sectors such as local farming. For instance, the United States have been protected the price of agricultural products for a long time and the government subsides approximately $16.5 billion of funding every year to suspect the price. Then the gap of the price appears between Mexico and the U.S because it is not rectified by the tariff. This caused the price down of the crops in Mexico and it became difficult to continue their farming. Furthermore, the number of Mexican migrant to the U.S has been increasing after the treaty to search their job. In these points, small sectors such as farmers or labor are caused the damage because of NAFTA. Moreover, increasing the number of people who are suffering from the poverty tends to caused organized crime like smuggling arms and illegal substances. This means the poverty caused by the treaty bring on the multinational crime.

In conclusion, the NAFTA have a great power and influence to both internal and international economy. The treaty is profitable for the multinational corporation and unfavorable for the local business. Today, many countries are negotiating to join the regional agreement such as Trans Pacific Partnership including Japan. These treaty have been increasing because many countries are interested in improving their economy. NAFTA is seen as a pioneer of these treaty and we have to think about both of positive and negative aspects. 

 

 

Reference lists

Mohammed Aly Sergie, NAFTA’s Economic Impact, 2014 http://www.cfr.org/trade/naftas-economic-impact/p15790 , Council onForeign Relations, February 14

Jeff Faux, NAFTA’s Impact on U.S. Workers, 2013 http://www.epi.org/blog/naftas-impact-workers/, Economic Policy Institute, December 9

Susana G. Baumann, Agricultural Subsidies Impact on Mexican farmers, 2014 http://voxxi.com/2013/01/11/agricultural-subsidies-mexican-farmers/, VOXXI, January 1

Laura Carlsen, Under Nafta, Mexico Suffered, and the United States Felt Its Pain 2013 http://www.nytimes.com/roomfordebate/2013/11/24/what-weve-learned-from-nafta/under-nafta-mexico-suffered-and-the-united-states-felt-its-pain, The New York Times, November 24