A clean-energy environmental deal was signed recently by NAFTA member countries on a bid to lower carbon emissions and address climate change, an indication that these countries can take clean energy seriously. On the other hand, federal statistics reported recently that 1/3 of manufacturing jobs in South Carolina had been lost since the United States signed NAFTA in 1994. These are signs that the North American Free Trade Agreement is still in hot water as it has always been.
How NAFTA Came About
Implemented under the term of former President Bill Clinton, NAFTA is an agreement among Canada, Mexico and the U.S. to protect the interests of these countries in the economic and financial aspects. It also stemmed from a vision to strengthen the competitive of North America in the global market, encourage business investments, reduce costs of trading and facilitate movement of goods across borders, among others.
While proponents say that NAFTA offers numerous benefits, opponents argue that it was at the expense of the middle class working Americans who have been displaced since its implementation. Let us look into the contentions of the supporters and critics of NAFTA. Here are some of the benefits and setbacks of NAFTA as seen by two opposing groups:
List of Pros of NAFTA
1. Improved Labor Conditions.
Supporters of NAFTA posit that this open-trade agreement among the three member countries brought about the founding of the North American Agreement on Labor Cooperation (NAALC), a parallel agreement on labor cooperation that aims to improve working conditions and living standards of workers. Moreover, it helped address labor issues such as secret balloting, migrant worker protection and discrimination. Basically, it gave the assurance that the workers’ rights are not violated. Other issues NAFTA focuses on are the standards of employment and occupational health.
2. Trade and Commerce Growth.
Advocates for NAFTA claim that the trade agreement offers three specific benefits with regard to trade. First is the removal of all tariffs among the three countries that was instrumental to the reduction of inflation and importation costs. Second is the fair chance given to each country to take part in bidding for government projects through open-market trading. According to proponents, this has opened doors for more bidders to offer lower bids. Third is the motivation it gives to investors to join the trading industry as well as expansion of small and medium enterprises.
3. Economic Boost of States.
Proponents express the importance of NAFTA to the economies of the borders of Mexico, Canada and the United States, particularly the longest border between Mexico and the U.S. which is the state of Texas. Supporters say that NAFTA implementation strengthened the metal and clothing industries of this state. This was evidenced by the 13% increase in sales just a year after the implementation of the trade agreement.
4. Strengthened Economies of Member Countries.
Supporters posit that the trading among the three countries have catapulted from $297 billion to $1.2 trillion in the last two decades. The agriculture industry in the U.S. was one of the industries that have benefited from NAFTA while Mexico and Canada became the two top importers of products from the country in 2014, with $240.3 billion and $312 billion respectively. Mexico imported agricultural products and livestock from the U.S such as soybeans and beef as brought about by the reduced Mexican tariffs.
List of Cons of NAFTA
1. Negative Effect on Mexican Farmers and Industries.
Opponents of NAFTA argue that with the U.S. exportation of agricultural products and livestock to Mexico, the farmers were not able to compete with the low prices of the imports, thus, hurting the sales of local producers. This had a ripple effect since the drop in sales of domestically grown produce, the Mexican government cut down its subsidy to the farmers. In the case of the trucking industry, American truckers argue that the reciprocity with Mexico on allowing Mexican trucks and trucks for the U.S. to deliver commodities to and from the two countries might mean closing American trucking businesses. The U.S. rig count has been declining since last year, according to experts.
2. Loss of Jobs.
The manufacturing industry was also badly hurt since NAFTA was implemented and according to anti-NAFTA groups, this effect is still happening up to this day. What was supposed to be a boon to the economies of Mexico and Canada became a burden to the American working class since manufacturers transferred to these countries which resulted to loss of jobs. Additionally, those who did not leave had to lower the wages they gave to workers who were not even represented by labor unions and had to accept low pay in order to feed their families. Worse, local manufacturers chose to outsource their job requirements to Mexicans instead of the locals.
3. Exploitation of Workers.
NAFTA expanded the maquilodora program which allowed American manufacturing companies to employ Mexicans living near the borders for their assembly lines and plants. Maquilodoras were also paid very low wages and did not have representation because many Mexicans did not know about labor unions. Advocates for labor rights also claim that NAFTA has allowed the exploitation of Mexican laborers who are forced to labor in poor working conditions and live in dilapidated shelters without electricity.
4. Environment Destruction.
Despite the talks of lower carbon emissions, opponents of NAFTA contend that the environment is still destroyed by the harmful chemicals from pesticides and fertilizers used by Mexican farmers to increase production of crops to compete with imported agricultural products. Also, the growing desire of farmers to expand agricultural land, they turned to burning and destroying more forests to convert them to farm land. These practices will still be sending carbon emissions in the air and cause air pollution. The recent signing of a green deal is just the start and it will take years to see the results but the ongoing wrong practices in farming are already affecting the environment.
With the contentions from both supporters and critics of NAFTA, this issue will remain to be a controversial topic. This has even been a continuing political debate in the country involving presidential candidates. What is important is to ensure the pros of this trade agreement outweigh its cons.