Question

1. Briefly review some of the benefits and detriments of the North American Free Trade.

2. What is your view of NAFTA: Support it, want to see it cancelled, or somewhere in between? Provide at least one specific example that supports your choice.

(For example, one benefit of NAFTA may be that overall milk prices have decreased for the US consumer. However, for the US Farmers selling dairy milk, they are getting less for their milk due to NAFTA. As a student, one could argue either side of the issue. For this example, the student would pick a side and the response is supported by research from course and chapter concepts--though DO NOT use this particular example since it has already been provided).

Answer 1

1. The trade between Canada, Mexico, and the United States has tripled since the enactment of NAFTA. Due to greater trade economic output has increased leading to stronger growth. Subsequently, it has created jobs. Another aspect of NAFTA is that it has tripled the foreign direct investment (FDI). It has benefited the consumers since it has lowered prices due to the elimination of tariffs.

                                                On the other hand, job migration has repressed wages, Mexican farmers have been put out of business due to the presence of U.S. government-subsidized farm products. It has also led to the substandard working conditions of the unemployed Mexican farmers. It has also led to the degradation of the Mexican environment by the U.S companies in order to keep the costs of the products low.

2. I support the NAFTA since U.S. oil imports from Mexico cost less because tariffs have been eliminated, which in turn has reduced US dependence on the Middle East. Due to the elimination of tariffs, we have low-cost oil and hence gas prices. Therefore, transportation cost has been reduced and thus food prices are lower.