NAFTA, the North American Free Trade Agreement, has eliminated many tariffs and other trade barriers between the United States, Mexico and Canada. Since then, trade between the three countries has increased severalfold. But not everyone celebrated this development. Let`s look at the pros and cons of NAFTA. However, the effects of NAFTA in the United States were often masked by the Boom and Bust cycle, which fuelled domestic consumption, investment and speculation in the mid and late 1990s. Between 1994 (the year of NAFTA) and 2000, total employment in the United States increased rapidly, bringing overall unemployment to a record high. However, unemployment began to rise in early 2001 and 2.4 million jobs were lost in the national economy between March 2001 and October 2003 (BLS 2003). These job losses were mainly concentrated in the manufacturing sector, which has seen an overall decline of 2.4 million jobs since March 2001. Employment growth in the economy is fading, the underlying problems caused by U.S. trade deficits have become much more evident, particularly in the manufacturing sector. While it has become very difficult to stimulate domestic demand, it is absolutely necessary to increase global demand to restore an open, expanding, sustainable and equitable global economy.
However, it is highly unlikely that adequate aggregate demand will result exclusively from an expansion of trade or development in or between industrialized countries.11 Much of the debate among political experts has focused on how to mitigate the negative effects of agreements such as NAFTA, including whether workers who lose their jobs are compensated or whether they are proposing retraining programs to help them move into new industries. Experts say programs such as U.S. Trade Adjustment Assistance (AAT), which helps workers pay for education or training to find new jobs, could help rebuke anger over trade liberalization. The United States had already concluded a free trade agreement with Canada in 1988, but the addition of a less developed country such as Mexico was unprecedented. Opponents of NAFTA have taken up wage differences with Mexico, which had only 30 percent of U.S. per capita income. U.S. presidential candidate Ross Perot said in 1992 that trade liberalization would cause a “huge noise” of American jobs fleeing the border. Supporters such as Presidents Bush and Clinton responded that the agreement would create hundreds of thousands of new jobs a year, while Mexican President Carlos Salinas de Gortari saw it as a chance to modernize Mexico`s economy so that it “exports goods, not people.” NAFTA has six major advantages.
According to a 2017 Congressional Research Service report, trade between Canada, Mexico and the United States has more than tripled since its adoption. The agreement reduced and eliminated tariffs. I think the dispute resolution mechanisms, which include workers` and the environment, would be better than leaving dispute resolution to trade experts who, as the United States.