Nafta - Advantages And Disadvantages

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NAFTA – Advantages and Disadvantages


In March of 1994, NAFTA (North American Free Trade Agreement) was signed by leaders of the United States, Mexico, and Canada. This agreement is about tariffs and cooperation of trade among the three countries. The three countries receive many benefits from NAFTA. There are also disadvantages of this agreement.
The major advantage for each country is free trade and more exportation. In Mexico, the government says that NAFTA produces more foreign investment. The industries that gain the most with NAFTA are maquiladoras (assembly plants) and the automobile industry. Production is cheaper here than in other countries because there is cheap labor. In the United States, many companies have been benefiting from NAFTA, especially companies that sign long-term agreements. Industries of banking, energy, equipment, and construction have more advantages than other industries. Also, Texas receives more benefits than other states. It’s close to the Mexican border and has many trading facilities like modern airports. Because other countries have benefited from NAFTA, other countries want to join also. The president of Chile, Eduardo Frei, went to the United States in March to talk to American leaders about NAFTA. He thinks that inclusion in NAFTA would help the Chilean economy. He says that free trade is "the basis and foundation of development and growth of our country". He understands that NAFTA brings many economical advantages.
With the passing of NAFTA, many economic benefits were expected. However, in reality, the agreement caused many economic problems. First of all, it hurt the Mexican economy. The Mexican labor force is experiencing a growing gap between wages and prices. In the first two years of NAFTA, the Mexican labor force lost over two million jobs. Many of the small businesses went under because they couldn't compete with the large foreign corporations. Also, the peso has devalued conside...