A Brief Note On The North American Free Trade Agreement

Employment is the main source of income for the majority of the population in United States, Canada and Mexico. Therefore, the most prevalent method of measuring a trade agreements impact on the well-being of the populace can be found by calculating the number of jobs gained or lost as a result of the agreement and the quality of said jobs. The largest trade agreement in North America is called NAFTA. The North American Free Trade Agreement (NAFTA) was officially signed on January 1st 1994, creating the largest and one of the most powerful free trade regions of the world. NAFTA governs the entire spectrum of trade and commerce on the North American continent uniting the economies of Canada, Mexico, and the United States. This agreement has†¦show more content†¦Initial proponents of NAFTA argued that the agreement, seeking to liberalize trade between the U.S., Canada, and Mexico, would help generate thousands of jobs and reduce income disparity in the region. Opponents, howev er, warned that the agreement would cause huge job losses in the United States as companies moved production to Mexico to lower cost (Villarreal and Fergusson, 2014). Now that the agreement has been in place for over 20 years the results yielded can be clearly discussed. One of the biggest proponents of debate comes from the losses and gains taking place in the work force; more specifically how the agreement has impacted jobs across all three regions. As stated earlier, it has been a fear of many that developing trade relations with developing countries such as Mexico, would cause U.S. job losses and potentially equate to rising unemployment. The reason for this is because the wages in Mexico were quite lower than that of the U.S., giving Mexico the default advantage in manufacturing goods that might require significant labor. Several reports found that NAFTA had little or no impact on aggregate employment (Hornbeck, 2004). Hornbeck (2004) reports that the Carnegie Endowment study suggests that there was a net gain in U.S. employment in the first ten years following the Act, creating between 0 to 270,000 jobs. The Carnegie study is just one of many that state’s NAFTA’s net effect on jobs was negligible; however other data suggests otherwise. In an