What is NAFTA?

Introduction

The sole purpose of this paper is to delve into the creation of the NAFTA and point out, the role it has played in the development of trade among the member nations. It informs its importance to the citizens and to what extend it has affected the lives of different people in all the nations that are concerned. The goal of this paper is to get  a clear understanding of all that is connected to the NAFTA trade which has changed the international trade of the 21^st century.

What is NAFTA?

Many people are well aware of the North American Free Trade Agreement or what is popularly referred to as the NAFTA. Having been formed in 1994 under an Act of Agreement, which was arrived at by three major countries, the free trade has brought gained benefits to all the nations. These nations include the United States, Canada and Mexico that have opened trade to one another making it easy to import and export goods and services under the trade agreement. In fact, recent studies have gone to reveal that it is among the largest trade blocks in the world. The goal of the NAFTA was set up to eliminate hindrances that made it hard to conduct trade with outside nations. For instance, before the agreement came into place, if one needed to trade with Mexico from the United State, there were often tariffs, which were expensive for most people. Fortunately, with the implementation of the NAFTA, the tariffs that restricted trade were abolished giving people a chance to conduct free trade. This became one of the major reasons people welcomed the free trade agreement that was made possible by the NAFTA trade bloc. (Demetrius, 200)

The NAFTA has changed how Trade is done

When the free trade was formed and started in the early 1990s among the main major things people expected it to bring, were change in trade, increases opportunities for member countries and uplift the life of people in all nations. Although it has helped abolish trade tariffs, made the crossing of borders a normally exercise for all the member states and even led to the development of the super high- way that links all the three nations. Many still argue that there is still a lot that needs to be done. It has greatly favored the development of Mexico, for instance, bringing down the rate of poverty in that nation. (Mitchell, 2009)  Business owners in all the nations involved have also gained good returns from the agreement. It has availed job opportunities to the citizens, which people have depended for their livelihood. All of the three nations have recorded impressive profits in exports and imports, all of which have been made available by the entry of these NAFTA agreements. Ironically before the NAFTA was signed and made into law, a lot of controversy was said to have surrounded it. Especially on the Canadian side, where the NAFTA came at a time, when the nation was going into polls, elections wars were waged on that topic. After the polls had been won with few people to challenge the NAFTA, the pro-free trade that gained seats supported to make law. . It was at this point in history that the Canadian people changed the course of trade in their nation (Lederman, 2005).

Among the first things to have no-tariffs attached to them were the agricultural produce, which included the following ones: crops, eggs, meat, etc. On the other hand, this made it easy for large companies to import and export produce, which resulted to a boom of business. Consequently, this leads to the growth of GDP almost in all of the nations involved. The benefit that was realized meant that all nations benefited by doing trade with each other. However, others argued that in some cases it leads to imbalances, many had reasons to believe it developed all the nations that participated in the trade agreement.

It's Impact on the Labor Markets

Looking at it on a different perspective, the United States and the Canadian nations can't be compared satisfactorily to Mexico. On economic grounds these two nations were better placed than Mexico. Still, they went ahead and opted to join the NAFTA, which later became the largest in the world. For instance, in the past it had been claimed that the NAFTA has lead to massive loss of job opportunities to many American workers. Areas where that have worst been affected included, the industrial and the manufacturing sectors that experienced the effects. Some have gone ahead to blame it for encouraging brained-drain among member nations, since people were more likely to leave for where the grass looked greener. For example, Mexico, which is battling with poverty and striving to bring the rates down, has constantly been criticized for lacking to invest more on education.  Again on the infrastructure, this is also an area where they have been required to show some improvement on (Abowd, 1991).

Many argue, it has led to the explosion of illegal immigrants who flooded in developed nations, such as the United States and Canada from Mexico. Its effect has led in the smuggling of goods and services within borders in all the nations that are within the agreement. It has also led to the growth of illegal chattels, which have taken advantage of the open- borders policy to further their unlawful dealings. Following the recent findings that have been done on American soil, the numbers of illegal immigrants that continue to flood have shot-up in the recent times. Many believe they are pursuing the American dream. Unless rigged measures are put in places and transparency brought into examining immigrant, the beautiful concept that the NAFTA sought to achieve will be lost (Wiarda, 1995).

As a word of advice, all the involved nations should strive to put checks and balances that will ensure all of its citizen’s productivity is not affected by the free trade agreement. A case, where by large number of professionals who are leaving Canada and Mexico and going to work to the United States should be something that is happening in all the nations as well. This presents a picture that is imbalanced and   unless addressed can lead to what many call as brain -drain.

The Impact NAFTA has in all Nations

One of the problems that have raised concern to many has been loss of jobs. Under the NAFTA, it is estimated that very many people have lost their jobs either to out -sourcing or the trade agreement that has come with its different terms in working abroad. People have also argued to prevent the situation from getting worse, they should set up regulations that will govern the labor force and avoid much job losses. Again, others have blamed it for snatching the income from low-scale farmers who have lost all that they could have earned to the NAFTA agreement. In this case, the most affected have been the Mexican farmers; almost resulting in problem for the nation can’t feed its citizens. The number one reason has been blamed to the many subsidies the United States has imposed on the Mexican corn. Many have said if the subsidies are to be abolished or reduced the Mexican farmers would reap great profits (King, 2006).

The Positive impact that the NAFTA has brought on the Canadian side is increases job employments. Compared to past years, the nations have recorded a positive change in this area.  Among the greatest benefit that they have been able to enjoy has been the bilateral and agricultural boost. These are among the many positive benefits the open trade has promoted in the member states.

Investment levels have also gone up almost in all of the three nations. Among the key things investors look for are: political stability and the potential of the markets. All these are some of the things that the NAFTA has helped to promote in the entire three nations. The numbers of investments that have been done in the recent times compared to the past have shown a steady increase. The trade has also impacted on the value of all the currencies involved due to the close association that has been encouraged by the trade. It is widely known, that the United States dollar is one of the strongest currencies in the world. By being able to make dealing with Canada and Mexico this has brought a big impact on their own currency as well (Purchase, 1994).

Another major impact that can be blamed on the creation of NAFTA is the high competition that has brought among different companies competing for given markets. Due to the fact that it is an open border market, not everyone has traded fairly.  Many have employed unquestionable tricks and methods in order beat their competitors in winning markets. This has presented an imbalance picture, where not everyone has been given a fair avenue to sell or buy what they want. If the NAFTA umbrella is to benefit all the three countries, then they should re-visit the agreement, make amends to clauses that bring disagreements and set regulations to properly govern the act. Only then the people will be able to enjoy the benefits (Lederman, 2004).