Advantages and Disadvantages of NAFTA

Anytime a major alteration is made in the way a country does certain things, eye brows should be raised. It is very important to understand the impact that the changes will have on our economy and country as a whole. Executed on January 1, 1994, the NAFTA, which stands for North American Free Trade Agreement, is not an exception.

Understanding the advantages and disadvantages of NAFTA should help you realize whether it is truly beneficial for the people or not.

Advantages of NAFTA

NAFTA Reduced Tariffs
A tariff is the tax placed by the national government on an exported or imported service or good to discourage or encourage trade. The reduced trade restrictions introduced by NAFTA enabled the Americans easy purchasing of Mexican and Canadian goods. Particularly, the United States acquires much of its vehicles, gold, crude oil and machinery from the two countries. This is along with its fresh products, red meat, live animals, snack foods, and frozen and chilled foods.

The Three Countries Take Advantage Of Real Income Increases
Based on the article of Washington Post, a study conducted by three economists of Federal Reserve demonstrated that NAFTA boosted incomes within the United States by 0.17 percent, in Mexico by 1.3 percent and in Canada by 0.96 percent.

Increased Of Trade Between, Canada, Mexico and the United States
NAFTA has been recognized for hugely increasing trade between Canada, Mexico and the United States. Trade of services and goods between these three countries has elevated from $337 billion during the year 1993 up to $1.182 trillion during the year 2011.

Provided More Employment Opportunities for the US Workers
Based on the Chamber of Commerce of the United States, the increased trade because of NAFTA supports nearly five million jobs in the United States alone.

Disadvantages of NAFTA

Less Benefits To Mexican Workers Than Expected
Though NAFTA encouraged huge US investments within Mexico, much of it has been used to establish factories in which Mexican workers offer cheap employment to make US goods. The agreement has failed in its aim of increasing the middle class size of Mexico since Asian labor proves to be more affordable.

Increased Tariffs Yet Not Regulations
NAFTA might have removed tariffs between the three nations, yet it did not do away with the number of customs regulation which might stifle trade. Origin regulations rule decide if a good is qualified for trade under the guidelines of NAFTA, while exporters should accomplish origin certificate paperwork. In simple words, even with less or no tariffs, still there are a number of government-imposed obstructions to trade.

By weighing properly the advantages and disadvantages of NAFTA, you should have a better insight of where you should stand. The information mentioned above should be helpful.