NAFTA: Its Benefits, Essay Example

Overall, has NAFTA been a success for the three economies? How has NAFTA impacted trade, investment, labor markets, and environment in these countries?

Even though NAFTA has most recently become for critics a lightning rod that they can use to debate and question its viability. However, NAFTA has been a success for the countries that have been involved. This is because. The principle goal of NAFTA was the delivery of free more trade for its member countries from its inception. By 2002, trade between the United States and Mexico had tripled from $81 billion to a staggering $232 billion. At this rate, trade between the United States and Mexico was growingtwice as fast as the trade between the United Sates and the rest of the world. This over the next decade, made Mexico and Canada the second and first trading partners respectively for the United States.

Which country do you believe has benefited the most?

Mexico is the country that has benefited the most from NAFTA. This is because Mexico saw an increase in foreign investment from the United States, a factor that revitalized the Mexican economy. Furthermore, the country moved to decentralized and democratic capitalism from a centralized protectionism government. This led to a more democratic lifestyle that saw individual’s freedoms easily accessible and exercisable leading to an increase in local investmentas well. Political competition was also seen in Mexico as a result of the more decentralized and economic competition that was embodied in NAFTA. This democracy is what led to the first opposition party to win an election in 71 years in the 2000 elections.

Has NAFTA caused any problems?

NAFTA has come with its fair share of problems. For example, NAFTA advocates had claimed that the acceptance of this trade agreement would cause an increase in exports and as such lead to the creation of a significant number of jobs for the people of Mexico. This was estimated to be in the thousands. However, this was not to be realized as an increase in the number of Unites States owned companies moved into Mexico, these companies took advantage of the easily available and cheap labor that exists in Mexico, having relatively no impact in the welfare position of the people of Mexico. The balance between the jobs created and the jobs destroyed as a result of the companies moving into Mexico titled against the Mexican people as these companies opted to hire their own skilled laborers while taking advantage of the cheap labor.

What segments of the three economies may have been hurt by NAFTA?

The agriculture sector of all the three economies is the segment that may have been hurt the most by NAFTA. This is because local farmers, especially in Mexico, were most affected as the food that was imported tariff-free led to them being priced out of the market. This led to many farmers abandoning agriculture and farming to head north for better and greener pastures.

What kind of new challenges will this agreement face?

In the near future, this agreement is going to face the challenge of relevance and benefit from concerned parties. This is because the Mexican economy has failed to realize some of the crucial benefits that the trade agreement had promised during its inception. The impact of domestic industries has been considerable as multinationals have opted to import parts for their own suppliers.