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From the moment that man traded his first deer pelt for a loaf of artesian bread, trading had begun. It was one person exchanging something he had no need for in order to receive something else. It has long been a topic of controversy. Taxes and tariffs were placed on imported and exported items as a way to generate revenue for governments. A great example of the rebellion against tariffs placed on what was deemed a necessary item was tea during the colonial days. Look at the end result of that tariff and you will discover the beginnings of the American Revolution through the Boston Tea Party. There are great impacts on mercantilism that are currently, and have been, debated regarding the use of free trade between countries. In this article we will cover many of the basics of free trade and the questions you may have regarding this subject.
What is free trade?
Free trade is an agreement between countries that stipulates that no taxes or tariffs will be levied against goods or services that are imported or exported between the participating parties. There can be a country wide free trade agreement or there can be a free trade zone as an incentive to draw in companies and manufacturers so that there can be an increase in business and a boon to the economy.
How can it harm the economy?
If merchandise can be produced too cheaply in another country there is the danger of American manufacturing plants and businesses closing up shop here in the United States and leaving to be outsourced in another country. Call centers are seeing a major trend with this by companies turning to India for their cheaper labor wages and lax labor laws. The debate over buying merchandise and frequenting companies or businesses that only buy their own native country's products is one that you must answer for yourself.
Why was it created?
NAFTA was created as a joint effort to help increase profits between Canada, the United States and Mexico. It would allow for each country's major exports to flow freely without worrying about taxation on importation and exportation of the goods that citizens most readily need and wish to purchase.
How does NAFTA impact me?
The North American Free Trade Agreement affects you each and every day that you buy merchandise made in the United States, Canada or Mexico. It impacts your job and whether or not your company will wind up relocating to Mexico due to cheaper costs of materials and workers who will work for far less pay rate. NAFTA is something you should be aware of all the facts before making up your mind about. There are obvious benefits and there are obvious detriments that must be taken into consideration.
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