The North American Free Trade Agreement (Nafta) Has Benefited

But other economists, including Gary Clyde Hufbauer and Cathleen Cimino-Isaacs of the Peterson Institute for International Economics (PIIE), have pointed out that increased trade is paying off the U.S. economy. Some jobs are lost because of imports, others are created and consumers benefit greatly from lower prices and often improved product quality. Your 2014 PIIE study on the impact of NAFTA revealed a net loss of about 15,000 jobs per year as a result of the pact – but gains of about $450,000 for each job lost, in the form of higher productivity and lower consumer prices. Many analysts explain these differences in results by the fact that the Mexican economy is “two-speed”, where NAFTA has led the growth of foreign investment, high-tech production and wage growth in the industrial north, while the south, largely agricultural, has remained disconnected from this new economy. University of Pennsylvania economist Mauro Guillen argued that Mexico`s growing inequality is due to NAFTA workers receiving much higher wages from trade-related activities in the north. But the most important aspect for Canada – opening up its economy to the United States, by far Canada`s largest trading partner – was before NAFTA, when the Canadian United States came into force in 1989. Free Trade Agreement (CUSFTA). Total Canada-U.S. Trade rose rapidly in the wake of trade liberalization in Canada. After NAFTA, Canadian exports to the United States increased from [PDF] $110 billion to $346 billion; Imports from the United States increased almost in the same way.

Maquiladoras (Mexican assembly plants that absorb imported components and produce goods for export) have become the emblem of trade in Mexico. They left the United States for Mexico, hence the debate about the loss of American jobs. Revenues in the maquiladora sector had increased by 15.5% since nafta in 1994. [68] Other sectors have also benefited from the free trade agreement and the share of non-cross-border exports to the United States has increased over the past five years [when?], while the share of exports from border states has declined. This has led to rapid growth in non-cross-border metropolitan areas such as Toluca, Leén and Puebla, all more populated than Tijuana, Ciudad Juérez and Reynosa. During the heated debate that continued its adoption, economists and U.S. government officials predicted that NAFTA – a trade agreement for trade liberalization between member countries – would increase trade surpluses with Mexico and create hundreds of thousands of jobs. “But the evidence shows that the projected surpluses did not occur as a result of the passage of NAFTA in 1994,” notes Robert Scott, chief economist at the Economic Policy Institute, a left-wing think tank in Washington, D.C. Instead, the number of Mexican immigrants more than doubled, again between 1990 and 2000, when it approached 9.2 million. According to Pew, the river has reversed, at least temporarily.

Between 2009 and 2014, 140,000 more Mexicans left the United States than they did, probably due to the effects of the financial crisis. One of the reasons NAFTA did not cause the expected reduction in immigration was the peso crisis from 1994 to 1995, which sent the Mexican economy into recession. Another thing is that the reduction of tariffs on Mexican maize has not prompted Mexican corn growers to plant other more lucrative crops. This led them to abandon agriculture. A third point is that the Mexican government has not secured the promised infrastructure investments, which has largely limited the impact of the pact on production in the north of the country.