Nafta

"The free trade argument states that, if each nation produces what it does best and permits trade, over the long run all will enjoy lower prices and higher levels of output, income, and consumption that could be achieved in isolation."  


  The North American Free Trade Agreement (NAFTA), implemented in January of 1994, created a situation in North America in which there are no taxes on most products imported and exported between the three countries. Ideally, the governments of Canada, the U.S. and Mexico believed that breaking the trading barriers would increase jobs and other things as it bettered each of their economies. NAFTA, however, has not necessarily helped the economies in the way in which the governments had projected.


  There was much speculation before the signing of the treaty that NAFTA would not work out the way it was projected to. Some economists believed that one major problem which NAFTA would create, as opposed to what the governments thought, is loss of jobs. "In Canada and the United States, much of the political opinions against NAFTA has centered around the low wage rates in Mexico and the possibility of jobs being moved south of the Rio Grande River."   It had seemed obvious for some that many wealthy factory owners would move to or expand in Mexico, resulting in thousands of lost jobs. As well, this would clearly create more exports for Mexico, and less exports for Canada and the United States. However, in the eight months after the implementation of the agreement, Canada had exported 33.2% more to Mexico and imported 31%   more from Mexico than usual.   This may show that Canada still exported more to Mexico then it imported from them, but, one must think that when the agreement!


  was first implemented, exports to Mexico may have included factors of production, businesses, etc. If so, these exports will have soon leveled off and jobs would be lost in Canada as businesses moved to Mexico. This has been seen to be...