RESEARCH INTO THE NORTH AMERICAN FREE TRADE AGREEMENT

In January 1994 the United States, Mexico and Canada entered into the North American Free Trade Agreement (NAFTA) and created the largest free trade sector and the richest market in the world. The treaty was said to benefit over 400 million consumers all over the world. Chile was even recently added to the treaty in 1995 and will become a full member within the next century.1

NAFTA is a regional trade pact that calls for the elimination of all tariffs and trade barriers existing among Canada, Mexico, and the United States. It is unique because the treaty created the largest free trade zone in the world and outlined economic policies as well as address issues like the environment and labor conditions.2 NAFTA also includes bilateral provisions intended to resolve sensitive issues between trading partners.

This regional integration is said to lead to benefits for North America like those members of the European Community, because it would create a single market for millions of people producing and consuming goods and services. For Mexico, the agreement establ

The development of NAFTA was originally to benefit the three countries of North America. It may have instead led to unemployment, environmental devastation, and serious health problems but not without giving benefits to corporations whom have reduced their costs and largely control the free market. The North American Free Trade Agreement must be revised in order to counteract for the problems that have occurred such as pollution along the US-Mexican border, public health issues due to lax environmental and food importing laws, and "cheap labor". The hope of job creation has not yet even effectively occurred.

NAFTA has created jobs for American, Canadian and Mexican workers in export related industries, which are higher in productivity and pay thirteen to sixteen percent more than the average wage. NAFTA has created new coalitions, which cross borders and political party lines and affect workers, farmers, environmentalists, consumers and religious groups. Banks have now marketed mutual funds to all treaty countries, which also make North America more appealing to foreign investment. 16

Over 400 million consumers are receiving the benefits of newly opening investments and development opportunities. North American industries in particular have great opportunity with exports as the driving force, elimination of the tariffs, effective procedures to resolve trade disputes, standardization of goods between all treaty members and "free-flowing" cross border movement of goods and services. Economic growth would increase with the increase of international trade, which in turn create a more efficient use of resources, lowers costs and would promote increased competition, lowering costs for both producers and consumers. Increases in income caused by economic growth would be a powerful source to expand markets especially for Mexico because of its' low average income. 6

A consensus among farmers from all three NAFTA countries is emerging about NAFTA effects on the agricultural trade. While agricultural exports have increased under NAFTA, neither farmer in Canada, Mexico nor the US have received benefits in an increase in their standard of living. US exports to Canada and Mexico grew 35%, but net farm incomes have remained the same. In fact, 45% of US small- and medium-sized farms suffered real declines in. During that same period, Canadian agricultural exports to the US grew 57%, but net farm income in Canada hasn't caught up to 1986 levels of production.

One of the greatest impacts on Canadian and United States economies has been loss of jobs and decreased wages. Even though NAFTA has created jobs in the export sector, other production industries have moved their facilities to Mexico where wages are lower and operating costs are lower. Also, wages in Canada and the United States have in some cases been lowered by the threat of job loss associated with companies moving to Mexico. On a whole, it is perceived that workers rights have diminished somewhat because employers hire "cheaper labor" to help decrease production costs and increase profits. In the United States and Canada some wages are stagnating if not declining somewhat. In essence, the larger corporations and businesses have benefited from NAFTA while smaller companies have lost money or gone bankrupt. 17

The big winners under NAFTA have been large "agricultural businesses" who exploit the below-market price imports to drive down domestic commodity prices in items such as wheat, hogs and cattle.

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Approximate Word count = 2590
Approximate Pages = 10 (250 words per page double spaced)