NAFTA Global Business Strategies NAFTA:

NAFTA

GLOBAL Business STRATEGIES

NAFTA: FICTION vs. REALITY FOR FARMERS & WORKERS

The objective of this work is to research and analyze the role of regional integration in promoting global business. This work will discuss the advantages and disadvantages of regional integration. (NAFTA, EU, APEC, ASEAN, CAFTA) and will compare and contrast the economic development stages of countries within one region and the ramifications of the region's economic development for global business. This work will focus on the North American Free Trade Agreement (NAFTA).

According to the Public Citizen website the views surrounding implementation of the North American Free Trade Agreement (NAFTA) are so divergent because: "NAFTA was a radical experiment" in which three nations that were so radically different merged in this manner. The North American Free Trade Agreement was implemented January 1, 1994 with the hopes that it would promote global business through integration of the economies in the NAFTA region. According to one work: "NAFTA promoters - including many of the world's largest corporations - promised it would create hundreds of thousands of new high-wage U.S. jobs, raise living standards in the U.S., Mexico and Canada, improve environmental conditions and transform Mexico from a poor developing country into a booming new market for U.S. exports." (North American Free Trade Agreement, Public Citizen, 2006) Others however believed that NAFTA would "launch a race-to-the-bottom in wages, destroy hundreds of thousands of good U.S. jobs, undermine democratic control of domestic policy-making and threaten health, environmental and food safety standards." (Ibid)

GLOBAL TRADE AND NAFTA

The term 'free trade' is a misleading one at very best. NAFTA has caused damages in the lives of millions in the U.S. Mexico and Canada. The report entitled: "The Ten-Year Track Record of the North American Free Trade Agreement: U.S., Mexican and Canadian Farmers and Agriculture" states that: "Corporations like ADM, Cargill, and ConAgra have intensified their control over all areas of production. Over 80% of U.S. corn is exported by three firms: Cargill, ADM and Zen Noh." (Public Citizen, 2006) Furthermore "the four largest chicken firms controlled half of the U.S. processing and production market, and the top four U.S. beef packers controlled 81% of the U.S. market (9% higher than in 1990).

While all of this has culminated the independent "diversified farmers have struggled with chronically low prices, diminished income and debt...." (Public Citizen, 2006) Yet the big corporations are flourishing in profits. In fact under the terms of the NAFTA agreement the "volume of trade in agricultural products has risen and low-priced imports have crashed prices paid for farmers to for crops. Last but not least food prices have actually increased under the NAFTA agreement which is contrary to the promise given concerning the outcomes of the trade agreement under NAFTA. (Ibid; paraphrased)

According to the work entitled: 'NAFTA at Seven" while the reports since implementation of NAFTA have "regularly declared the agreement to be an unqualified success" the actual truth of the matter is that: "from the point-of-view of North American working people, NAFTA has thus far largely failed." (Economic Policy Institute Brief, 2001) While all U.S. states lost jobs the following specific outcomes are stated by the Economic Policy Institute:

The 1 million job opportunities lost nationwide are distributed among all 50 states and the District of Columbia. Those affected most in terms of total jobs displaced include: California (-123,995), Texas (-72,257), Michigan (-63,148), New York (-51,582), Ohio (-49,886), Illinois (-47,701), Pennsylvania (-44,173), Florida (-39,987), Indiana (-35,157), North Carolina (-34,150), and Georgia (-30,464)" (2001)" (Economic Policy Institute, 2001)

The Economic Policy Institute also states that wages and incomes in Mexico have been affected by NAFTA. The brief states that: "Official unemployment levels in Mexico are lower now than before NAFTA, but this decline in the official rate simply reflects the absence of unemployment insurance in Mexico. In fact, underemployment and work in low-pay, low-productivity jobs (e.g., unpaid work in family enterprises) actually has grown rapidly since the early 1990s. "(2001) While more workers are actually working in Mexico, the wages are hideously low. The Economic Policy Institute brief states that: "... The normal process of rural-to-urban migration that is typical of developing economies has reversed since the adoption of NAFTA." (Economic Policy Institute Brief, 2001) Living and working conditions in Mexico are stated to have "deteriorated." (Ibid)

SUMMARY AND CONCLUSION