On NAFTA

Sorry It's long but Oh well


If NAFTA were not in existence then the American economy would be stronger because fewer jobs would be moved to Canada and Mexico.
The economy of the United States has been a little bit unstable for a few years; many people believe this is partially because of rising oil prices and partially because of the war in Iraq. I believe that the largest problem came before George W. Bush was first elected with the signing of the North American Free Trade Agreement under the leadership of president Clinton. The purpose of this agreement was to get better foreign relations with our immediate neighboring countries and served that purpose very well. The North American Free Trade agreement (often shortened NAFTA) is an agreement between Canada, The United States and Mexico, that allows each country to trade goods without being required to pay the usual import tariffs, which frees the countries businesses to compete freely across borders. NAFTA was signed in 1993 and was the first of several agreements of its nature to be signed. NAFTA has been very beneficial to companies from the United States as well as to the Mexican government. When United States companies saw the signing of NAFTA many saw a free agreement to cheaper labor because in the United States businesses have to adhere to the minimum wage, which is constantly rising, but in Mexico there is very little legislation written about wage limits. In Mexico people are usually willing to work for much less than people in the United States because there is a lower standard of living there. In the United States many people are not grateful for the jobs they have so they do not work as hard as they should, however in Mexico jobs are very few and far between so if a person has one they are willing to work hard to keep it. These factors are some of what led manufacturing companies to move some or all of their production into Mexico. Though it may seem like an expensive venture to move production to another country, in the long run it will end up paying for itself. The hardest thing a company had to undertake was constructing a site suitable for whatever they need it for. Next they hire and train a staff at a lower wage than the workers in the United States get paid, which can be very easy in most cases. One of the next tasks is to lay off the workers in the United States and sell the facilities. In doing this you have effectively lowered the amount of pay you disperse each week by moving the business into another country, which is very profitable because in several cases the production of the company went up as well. One such case of this was the Bosch Corporation’s factory in South Carolina, which was moved to Mexico with the intention of having a higher net income, which they succeeded in doing.
If NAFTA had not been signed then these companies would stay in the United States and would have continued to build the economy. Many people still don’t see what affect this has on our present economy but the effects are obvious. When NAFTA was signed, the companies did not instantly appear in Mexico and start production but they took time to see what the most profitable plan would be. The companies saw that in order to move the production smoothly, they had to reorganize where the headquarters would be for convenience, and to not allow warning signals to leak out to the rest of the employees. Another beneficial thing would be to have some Spanish-speaking supervisors to see that the work was done correctly. Then a reorganization of transportation might also be necessary in order to ship things from Mexico to the United States. These processes might take several years to do before you could even start the construction of the facilities, which could take another year or two. If these projects went smoothly a company could have finished by around 1999. Another problem with NAFTA was that in 1995 Mexico was undergoing some economic problems and used several parts of NAFTA to get money from the United States and Canada who had to pay because of the agreement.
Because of this agreement and others like it, the United States has lost large amounts of money that in the past would have been collected in tariffs. Overall NAFTA was a wonderful gesture but it had a downside in the fact that United States companies would try to use the agreement for personal gain while hurting the economy of their own country. If this agreement were to be dissolved the United States relations with Mexico and Canada would turn very sour quickly and those companies that moved out of the United States would end up charging higher prices for their goods or go out of business. This could also ruin the economy of Mexico because all of those people would either be laid off or receive large pay cuts. Although the signing of NAFTA was not an economical benefit, the problems with getting rid of it would make things a lot worse than the way they are now.