NAFTA Trade American
Introduction
NAFTA (North American Free Trade Area) was established in 1964. Its formation led to the subsuming of the already existing Canada- U.S free trade area. Its formation was to ensure that it has eliminated all trade tariffs, reduction of non tariff barriers and also to liberalize trade in cross boarder businesses investments trade in several services. So in this case it can be said that the formation of NAFTA was really controversial. Until its formation many Americans had lost their jobs to majority of the U.S and Canada productive firms. There was also the loss of political sovereignty and NAFTA led to the change of so many government policies. Due to the fears of loss of jobs to the low wages in America, formation of NAFTA was thought to commit the American government to maintain and also extent its oriented forms. (McKinney, 2003).
Political perspective
NAFTA has not lived to its standards on the lives of the American workers. It has had so many impacts on the distribution of powers, wealth and income among these people. It has not kept its promise of providing jobs to the American workers. Instead it has had political impacts since it has set rules which only benefit a few elites and that is the rich and the most powerful. It is argued that NAFTA has failed due to the political influence. Since it was begun, it has reduced employment in the high wages, traded goods industries and this definitely led to a substantial loss of income for the American workers. It is due to the increasing trade deficits which have also displaced production hence leading to so many workers to lose their jobs. Politically since it has had so many political influences, this led to inequality in the wages and the falling demand for workers. It is only the political and highly powerful elites who benefited from this exercise. (Gareffi, 2000).
NAFTA was initially an agreement for the rich and the most powerful in the United States. In this case, it excluded the ordinary people. So politically, NAFTA rules are to protect the interest of the large corporations while at the same time undercutting the workers rights. It denied the workers environmental protection and democratic accountability. It is argued that NAFTA only protects the large corporations and hence neglecting the small ones. You find that the workers in the small corporations are not in a position to compete with the large corporations and this might lead to the closure of these companies. So in this case, democratic accountability is not well shown since the workers rights in the small companies have been threatened. (Gareffi, 2000).
The Americans were also promised a million jobs during its establishment. But instead, over a million jobs that were supposed to be created by NAFTA, people instead lost so many jobs and cut wages for a large number of American workers. NAFTA was established to make great deals for workers but instead it violated the workers rights due to the loss of so many jobs by these workers. The problems of inequality are still rising since it is only benefiting some few elites at the expensive of the ordinary workers. (Gareffi, 2000).
The reality in this case is that the denial of protection in the rules of internationally integrated market inevitability has also led to the undermining of the protections which are established in the previous separate domestic economies after so many decades of politic struggle. NAFTA in this case is seen to lead United States in the years of the 19th century in which the government economic function was to protect only the interests of the investors who make the smallest population while the working people who are the overwhelming majority in that society are seen to suffer. On the other hand, NAFTA has also economic impacts on the lives of the American workers. (Gareffi, 2000).
Increased living standards
NAFTA is said to create economic growth and so many job opportunities for both the Americans and Mexicans. It is argued that it will raise the living standards of so many American workers due to the economic benefits which are associated with it. NAFTA assures that rising material living standards can be achieved by rising productivity levels. It is through NAFTA that productivity has been in a position to increase. Workers have increased their total production hence increasing their living standards. Given the amount of labour, capital and raw materials, the only way these workers can trade their labour for more real purchasing power is if they produce more goods and services. It is through NAFTA which has made this possible through division of labour. This is because trade is thought to encourage more efficient production of goods and services and hence leading to a greater wealth in that country. You find that the role of trade is to reduce all trade barriers to goods that are exported to other countries. In this case, you find that most of the people in the North America deal with the production and farming sector. So in this case, you find that there are no trade barriers which have been put to ensure that when goods or even services are being exported, there are no tariffs which are imposed on these goods. As a result, you find that the cost of production is low and the employers in these farms will employ so many employees since their exports are duty free. This has a huge impact on the lives of the American workers since they are in a position to get jobs from these industries. This has also led to the increased production hence these employers are in a position to get high profits from their exported goods and services. As a result, the American economy has grown tremendously. (Sharma, 2000).
In agriculture, NAFTA will also convert their non tariff barriers on the agricultural trade. This will be reduced to zero tariffs. As a result, you find that most of the agricultural exports to the member countries will be zero tariffs. This will also a have a huge impact on the workers in these farms since you find that they will be in a position to export their products duty free. It means that their cost of production will be less and hence making these workers in these farms to have a competitive advantage since they are in a position to compete with other countries. The farmers are in a position to enjoy huge profits which has led to the economic growth of this country. (Sharma, 2000).
Job creation
NAFTA has had wide effects on the lives of so many people in the United States. It has created so many jobs to the Americans people. It is said that NAFTA has created 35,000 and 93,000 new jobs in the United States. Also it is predicted that NAFTA in the next five years will create 316,000 American jobs and displace 145,000 American workers and this will lead to a job gain of 171,000. (Peach, 2000).
Keeping factories in the United States
NAFTA has had an impact on the overall factory sector in the United States. It is due to the reduced tariffs that most of the producers of goods have been in a position to sell their goods to Mexico. It is due to the establishment of NAFTA that most of the factories have remained in the United States since they are benefiting so much from it. (Peach, 2000).
Lower wages to workers
It was due to the introduction of NAFTA that workers faced a drastic change in the wages. This is because NAFTA was established to ensure that there was increased production of goods and services. This also meant that the cost of production would be less and this could also be achieved by reducing the workers wages. The owners of these factories and firms then had to cut wages for these workers and this had a general impact on the workers. Also in the creation of the new jobs, so many workers also lost their jobs in return. So this can be seen as a negative impact of the NAFTA on the lives of the American workers. This was seen to affect so much the illegal immigrants who immigrated to America. These workers are usually encouraged to work in these firms just for a few dollars since they know that NAFTA will protect these companies. (Peach, 2000).
An integrated analysis of both political and economic impact of NAFTA
The economic and political integration of NAFTA have become a major inquiry in the development studies in the recent years. All these concerns have been as a result of NAFTA establishment and can be addressed through an examination of changes in the dynamics of apparel industry in the period NAFTA has been in place. In general, NAFTA has had so many impacts both economically and politically to the lives of the American workers. It can be seen that NAFTA was established to benefit only the powerful citizens and the large corporations and hence ignoring the workers rights in this case. The small corporations have not been in a position to compete with the large corporations hence leading to their closure and so many workers losing their jobs. Although NAFTA is seen to have led to economic growth in the United States due to free trade, it has had a wide impact on the lives of workers. It has not lived to its standards since it never fulfilled its promises of creating jobs but instead so many people lost their jobs in return. (Peach, 2000).
Conclusion
NAFTA was established with the goal of having free trade between the three member countries that is United States, Mexico and Canada. NAFTA has had so many economic and political impacts on the workers living in the United States. As a result, the government should review it and change some of the strategies since they are affecting the American workers.
Reference
Sharma, S. (2000): Economic integration and intra regional trade applied economics letters 7, 3.
Peach, J. (2000): NAFTA and economic activity along the U.S. - Mexico border. Journal of economic issues, 34, 2.
Gareffi, G. (2005): Is NAFTA a curse or a blessing? Integration and trade, 4, 11.
McKinney, J. (2003): Created from NAFTA: The structure, function and significance of NAFTA. Armonk, N.Y and London, Sharpe.
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