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Pros and Cons of NAFTA | North American Free Trade Agreement

NAFTA which stands for North American Free Trade Agreement is an agreement made between the United States, Canada and Mexico. This agreement was created to eliminate tariff for qualifying products, which was making the prices of exported and imported products significantly high. NAFTA had brought a sense of development in these three countries but not everyone had celebrated this development. Let’s take a look at the pros and cons of NAFTA. Let’s have a look at Pros and Cons of NAFTA here.

Pros and Cons of NAFTA are separately given below:-

Pros of NAFTA

  1. Allows for the establishment of trade standards.

One of the major condition in the agreement was to improve was the health, safety and industrial standards to the highest existing standard. Also, the terms included that the industrialization will not any pollution and all the environmental issues would be maintained.

  1. Lowered prices for goods

With lower tariffs there is reduce in import prices. Hence, it also lessens the risk of inflation and allowed the Federal Reserve to keep interest rates low.

  1. Ensures protection of intellectual property rights.

According to one of the stipulations in the treaty, Mexico will have to provide a very high level of protection for their people’s intellectual property rights. Any business companies or corporation must think twice before stealing intellectual property from other firms.

  1. Creates jobs opportunities.

According to the US Chamber of Commerce, NAFTA exports created five million new U.S. jobs. These jobs were distributed in 17 states and U.S. manufacturers added more than 800,000 jobs.

  1. Increased the trade between the US, Mexico and Canada.

The NAFTA significantly increased the trade between the three countries. In 2009 alone, the trade has amounted to $1.6 trillion in goods and services among these nations.

  1. Good for diplomatic relation

NAFTA strengthens the diplomatic relation between the three countries. In other words, countries that are economically interconnected are less likely to experience any diplomatic or military conflict.

Cons of NAFTA

  1. Increased porous borders

 NAFTA was supposed to bring economic prosperity to the countries as it allows free trade along the border. But instead, it only led to a porous border where illegal products and drugs are being exchanged between the two countries.

  1. Loss of business for small businesses

Many small and medium size companies have had a loss in their business due to huge corporations from both all the three countries. This further led to severe job losses and subsequent closures of several companies.

  1. Exploitation of maquiladora workers.

The labors that were taken by the US-owned companies near the border to assemble products for export to the US were not given labor rights or health benefits and also very less wages . Also, they were forced to work for more than 12 hours a day

  1. Deterioration in Mexico’s environment.

Since NAFTA threatened the farmers in Mexico, many farmers had to lose their job and many had to be more competitive, pushing them to use more fertilizers and other chemicals. This cost the country around $36 billion in pollution every year.  Also, the rural farmers had use up marginal lands, which further resulted in the deforestation.

  1. Can cause for excessive pollution.

There are many pandemic delivery trucks and factories in the country are the reason for pollution. There had been several reports of excessive pollution in the past.

Thus, these are the Pros and Cons of NAFTA.

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