Effects of Free Trade

NAFTA, the North American Free Trade Agreement, was ratified in 1994, and it allows tariff-free trade between the United States, Canada, and Mexico. The US joined the World Trade Organization the following year, which creates a similar pact with many other countries, most notably China, which joined the WTO in 2001. The United States’ participation in these agreements has had a negative impact not just on our country itself, but the other participants in free trade.

This act has had a particularly adverse effect on Mexico. While the country has drastically increased its exports, it’s only due to maquiladoras, those sweatshops on the US-Mexican border, which exist only to bring Americans cheap products, and exploit and dehumanize workers. Further damaging to Mexico’s economy was the America’s participation in the WTO which has caused many American factories to move from Mexico to Asian countries, such as China, which are even cheaper. According to Malkin’s New York Times article, Mexico now faces rising unemployment, lowered foreign investment, and depreciation of its currency. (http://www.nytimes.com/2009/03/24/business/worldbusiness/24peso.html)

While the pact has had a negative impact on Mexico, due to all the many free trade agreements the US is part of, our country has suffered as well. Even though Barack Obama promised to negotiate NAFTA during his campaign, according to his trade advisor, the agreement doesn’t need to be revised or reopened. Regardless, millions of American jobs have been lost over the last decade and a half after these free trade agreements were ratified, only to be sent to Mexico or Asia, so that American products can be manufactured in sweatshops. According to James Hoffa, the president of the Teamsters union, “These so-called trade deals are killing American jobs. The aren’t about trade, they’re about helping countries move their factories to countries with cheaper labor.”

Though there are many effects of free trade, such as environmental problems (other countries don’t have as stringent environmental policies as the US), child labor, sweatshops, the one the most people can identify with is the loss of jobs. Nearly everyone in this country has lost a job, or has a family member that has lost their job due to outsourcing, which is the practice of corporations moving their factories to foreign countries because of the much lower production costs. An estimated 2.4 million American jobs were lost to China alone, during 2001-2008. (http://www.epi.org/economic_snapshots/entry/counting_the_jobs_lost_to_china/) While throughout history trade tariffs have balanced trade and made it more expensive for companies to produce in foreign countries, thus giving them incentive to keep their factories in America, that is no longer the case. With free trade, there are no barriers to moving products from country to country, so more advanced countries with environmental restrictions and labor laws suffer, while countries like China and Mexico are exploited. Workers there, because of the lack of humanizing laws, can be forced to work for just a few cents an hour. Though most people seem to overlook free trade policies as the reason for these discrepancies, it’s a direct cause of the change in America’s economy, which most people agree has only been getting worse. (http://www.epi.org/publications/entry/bp173/)

By: Alison Darr


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