NAFTA Described as a 'Living  Thesis

  • Length: 10 pages
  • Sources: 6
  • Subject: Economics
  • Type: Thesis
  • Paper: #31161125

Excerpt from Thesis :

S. attributed to NAFTA. Figure 1: Rise in the Business Investment (adapted from "NAFTA -- Myth…," ¶ 1).

Myth #2: NAFTA has cost the U.S. jobs.

Fact: U.S. employment rose from 110.8 million people in 1993 to 137.6 million in 2007, an increase of 24%. The average unemployment rate was 5.1% in the period 1994-2007, compared to 7.1% during the period 1980-1993. ("NAFTA -- Myth…," ¶ 2)

Figure 2 reflects U.S. Employment Increases related in response to Myth #2.

Figure 2: U.S. Employment Relating to NAFTA (adapted from "NAFTA -- Myth…," ¶ 2).

Myth #3: NAFTA has hurt America's manufacturing base.

Fact: U.S. manufacturing output rose by 58% between 1993 and 2006, as compared to 42% between 1980 and 1993. Manufacturing exports in 2007 reached an all time high with a value of $982 billion. ("NAFTA -- Myth…," ¶ 3)

Figure 3 portrays the increases relating to the U.S. manufacturing output.

Figure 3: U.S. Manufacturing Output (adapted from "NAFTA -- Myth…," ¶ 3).

Myth #4: NAFTA has suppressed U.S. wages.

Fact: U.S. business sector real hourly compensation rose by 1.5% each year between 1993 and 2007, for a total of 23.6% over the full period. During1979-1993, the annual rate of real hourly compensation rose by 0.7% each year, or 11% over the full 14-year period. ("NAFTA -- Myth…," ¶ 4)

Figure 4 portrays the annual rate of real hourly compensation disputing Myth #4.

Figure 4: Annual Rate Hourly Compensation (adapted from "NAFTA -- Myth…," ¶ 4).

In his lecture, "Why This Conservative Favors This NAFTA," given shortly after Congress approved NAFTA in November 1993, Dick Armey, then a conservative representative, predicted that NAFTA would create the largest free trade zone in the world. "One of these lessons [in history] is that free trade leads to a prosperous world. Another is that protectionism leads to poverty (Armey, ¶ 13). Armey predicted that abandon the "winning formula" of NAFTA would not only damage the conservative party, but ultimately the U.S. In the future.

Significant Events/Dates

The following dates reflect significant events and/or dates related to NAFTA

November 13, 1979: While a candidate for President, Ronald Reagan proposed a "North American Agreement," purporting to produce a North American where the goods and people of the U.S., Canada and Mexico could more freely cross boundaries.

January 1981: President Ronald Reagan proposed that a North American common market be created.

October 9, 1984: The U.S. Congress adopted the Trade and Tariff Act; passed

October 30, 1984: The Act notably extended the U.S. president's powers to concede trade benefits and enter into bilateral free trade agreements.

December 10, 1985: President Reagan informed Congress that, under the authority of trade promotion, he intended to negotiate a free trade agreement with Canada.

October 3, 1987: The Canada-U.S. Free Trade Agreement (FTA) concludes in Washington.

January 1, 1989: The FTA is authorized.

November 6, 1987: A framework agreement between the U.S. And Mexico is signed.

August 21, 1990: President Salinas proposes that a free trade agreement between Mexico and the U.S. be negotiated.

June 12, 1991: Trade negotiations initiated between the U.S., Canada, and Mexico.

December 17, 1992: Brian Mulroney, Canadian Prime Minister, George Bush, U.S. president, and Carlos Salinas de Gortari, Mexican president, officially signed NAFTA. NAFTA would be effective with final approval from the federal Parliaments of the three countries.

January 1, 1994: NAFTA, along with the two agreements on labor and the environment, officially take effect.

December 9 to 14, 1994: At the Miami Summit, the U.S.,. Canada, and Mexico officially invite Chile to subscribe to NAFTA as a contractual party of the agreement.

1995: Disagreements continue between the U.S. Congress and the White House regarding the content of the free trade agreement with Chile. Consequently, Chile attempts to negotiate separate free trade agreements with Canada and Mexico.

December 29, 1995: Chile and Canada commit to negotiate a bilateral free trade agreement.

July 4, 1997: The Canada-Chile free trade agreement comes into effect.

1997: The U.S. presidency proposes applying NAFTA parity to Caribbean countries.

August 1, 1999: The Chile-Mexico free trade agreement comes into effect.

November 27, 2000: Trade negotiations resume between the U.S. And Chile for Chile's possible entry into NAFTA (NAFTA Timeline).

Benefits and Consequences

In the article "Should NAFTA be revisited? If you had to do it all over again, would you as President of the United States Support NAFTA -- the North American Free Trade Agreement-As Implemented?," Chuck Grassley, United States Senate (R-/A), asserts that Prior to NAFTA, the U.S. applied an average overall tariff of approximately 2% on Mexican imports. Simultaneously, Mexico applied an average tariff of approximately 12% on U.S. exports. When NAFTA dropped the tariff to zero on both sides of the border, it helped level the playing field for U.S. exporters. When NAFTA was implemented, Canada had begun to phase out its tariffs on U.S. imports under the U.S. 1988 bilateral trade agreement. Since NAFTA's implementation, U.S. merchandise exports to Canada and Mexico more than doubled ("Should NAFTA be…."). Conclusion

As noted at the start of this paper, trade liberalization, according to supporters of NAFTA, would occur as NAFTA would contribute to a net increase of good U.S. jobs; spurring U.S. exports to Mexico and Canada in high-wage industries. In addition, some proponents contended, NAFTA would help Mexico develop a stronger democracy and build a more contemporary economy (Anderson, Cavanagh, and Landau). On the other side of the NAFTA issue, opponents of the act argued "the trade pact would undermine U.S. jobs and wages by providing extra incentive for U.S. corporations to move to Mexico to take advantage of high unemployment, low wages, and rising productivity" (Anderson, Cavanagh, and Landau, ¶ 4).

In time, 15 years after the official adoption of NAFTA, opponents of the act may subscribe to the report by Malkin, arguing that NAFTA's promise has not been fully kept. Others, albeit, who support the act, may ascribe to the account by the Office of the United States Trade Representative, which claims assertions by Malkin, Massey and other opponents of NAFTA are not valid. Despite the passing of time, the reported "living, breathing, evolving" document, the researcher asserts, continues to contribute to pungent public discussions. Not only does the act continue to contribute to counter claims regarding past progress, it also influences future considerations for the business communities in the U.S. Canada, and Mexico (Cooper).

Works Cited

Anderson, Sarah, John Cavanagh and Saul Landau. "North American Free Trade Agreement."

Ed. Barry, Tom and Martha Honey. International Relations Center, Foreign Policy in Focus, Volume 2; No.1. 1997, January. .

Armey, Dick. "Why This Conservative Favors This NAFTA." Heritage Lecture #473. 4

November 1993.< http://www.heritage.org/Research/TradeandForeignAid/HL473.cfm>.

Cooper, John. "NAFTA at eleven: Despite growing pains, it's still seen by some as a valuable tool for Canadian business. CMA Management. Society of Management Accountants of Canada. 2005. HighBeam Research. 29 Apr. 2009 .

"IPS History: 1963 to Today." Institute for Policy Studies, N.d.
dc.org/about/history>.

Malkin, Elisabeth. 2009, March 23, "NAFTA'S Promise, Unfulfilled," The New York Times

29 Apr. 2009


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NAFTA Timeline The North American Forum on Integration. N.d. 29 Apr. 2009


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Office of the United States Trade Representative www.ustr.gov. NAFTA Facts. NAFTA -- Myth

vs. Facts. 2008, March.


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Rankin, David M. "Featuring the President as Free Trader: Television News Coverage of U.S. Trade Politics." Presidential Studies Quarterly 36.4 (2006): 633+. Questia. 29 Apr. 2009 .

"Should NAFTA Be Revisited? If You Had to Do It All over Again, Would You as President of the United States Support NAFTA -- the North American Free Trade Agreement-As Implemented?." The International Economy Summer 2008: 24+. Questia. 29 Apr. 2009 .

White, Stephanie. "First NAFTA, Now CAFTA?." E. July-Aug. 2005: 10. Questia. 29 Apr. 2009 .

Apr. 2009 ."

White, Timothy J. "Hufbauer, Gary Clyde and Jeffrey J. Schott, NAFTA Revisited:

Achievements and Challenges." Journal of Third World Studies 24.2 (2007). Questia. 29

Apr. 2009 .

Updated. North American Free Trade Agreement. 2009, April 23. 29 Apr. 2009


trade_agreement/index.html?inline=nyt-org>.

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