Pros and Cons of the North American Free Trade Agreement

Most countries have some form of trade deal between themselves and another country, which allows them to import items at lower taxation rates, tariffs or regulatory measures set forth by the government. In the 1990's, once such deal, named the North American Free Trade Agreement between Mexico, Canada and the United States, helped open the borders for free trade. People at once began to debate the ramifications of such a deal and how it would affect skilled trades and other matters of concern to US citizens.

There is some background information that you need to know about trade deals before you can fully understand the North American Free Trade Agreement and the trade deal it encompasses. You may remember your history lessons about how tea was once taxed heavily by the British back in the Colonial Era and helped spark the American Revolution. Small bits of information such as this that can help you to understand what it is that NAFTA necessitates, so you can get a better picture.

For free trade to work there has to be an agreement between two countries. The agreement allows for trade that has no tariffs, is not taxed nor imposed upon by laws that would change the pricing of the material. You should also know that it does not involve just merchandise. Jobs and skilled trades are also covered under free trade laws. For the most part, the basic principle is simple. One country sells another country its exports without worrying about price gouging or taxes levied on the imported items. There can be stipulations on the amount of goods traded between the two countries, similar to a cap on how much product can be imported or exported.

NAFTA has had many criticisms. The first being the price of products produced in Mexico. Labor laws are not very strict in Mexico and so merchandise can be produced far cheaper and sold for far less than items found in the United States or Canada. Industries, such as auto manufactures, are leaving the United States and Canada in favor of outsourcing their production to plants based in Mexico. This is a huge profit to those corporations, but a huge loss to American and Canadian workers who have lost their means of income.

The benefit of the North American Free Trade Agreement is that consumers do get substantially lower prices on materials produced and manufactured within the three countries involved. There is no worry about price gouging, as is often seen with certain products such as pharmaceuticals and clothing. American citizens are able to purchase their daily living necessities at a low price.

Click here for more information.