Category: Nafta

The North American Free Trade Agreement (NAFTA) is a treaty among Canada, the United States and Mexico that eliminated most of the barriers to free trade among the 3 countries. The agreement means purchasing certain items from NAFTA countries is often cheaper than buying similar goods from non-NAFTA countries. Thanks to NAFTA, enjoying Mexican avocados year-round is easy. Similarly, Canadians can save big by buying an American-manufactured car versus a model from Europe. Goods from NAFTA nations are imported tariff-free, based on NAFTA’s rules of origin. These rules state the percentage of the product’s content that must originate in the member country. The GDP of the three countries in 2012 was the following: Canada, US$1.82 billion; Mexico, US$1.18 billion; and the U.S., US$15.47 billion (World Economic Outlook Database, 2013).

Since the North American Free Trade Agreement (NAFTA) took effect in 1994, a number of disputes have arisen, and different sectors of the three member countries have complained about different issues (Vega, 2005). Nonetheless, economic exchange, investment, and migration flows among the three countries have increased (Weintraub, 2004). During this period, economic interdependence between the Unit ed States and Canada as well as between the U.S. and Mexico has increased (Cha- bat, 2000). However, the Canadian-Mexican trading relationship continues to be of small significance.

It is important to remember that the NAFTA was promoted in the 1980s by the U.S. Republican administration and President Ronald Reagan, who proposed a new relationship between North American countries. This tactic was especially designed to rehearse the U.S. American project to have more influence in the world economy (Mosco, 1990). In other words, this agreement was based on the commercial and political direction that the U.S. The focus on renegotiating the North American Free Trade Agreement (NAFTA) certainly accentuated the challenges of geography and economics.

NAFTA is historic in terms of setting the rules for regional trade. Coming into force in 1994 as the first free trade agreement between two developed and one developing country, NAFTA created a trilateral bloc for free trade in goods and services. At first blush, the numbers appear impressive. Between 1993 and 2015, merchandise trade between the three countries tripled to US$1 trillion, with Canadian exports to the US growing annually at 4.6%. NAFTA as a whole accounts for more than a quarter of the world’s gross domestic product (GDP). Canada and the US together constitute the world’s largest bilateral trading relationship, comprising US$663 billion in goods and services in 2015, of which Canada purchased US$337 billion, and with US$2 billion in trade crossing the US–Canada border each day.

NAFTA’s overall impact, however, is debatable, and arguably uneven. On the one hand, the Canadian government suggests that “since the Canada–U.S. Free Trade Agreement came into force in 1989, Canada’s two-way trade in goods and services with the United States has more than tripled”. Others suggest that this previous agreement had a much bigger impact on Canada’s economy than NAFTA, that Canada’s trade with Mexico is negligible, and that NAFTA’s effect on the US itself has been small. From these perspectives, NAFTA appears in need of an overhaul given the deeply uneven effects of free trade. Trump played on such misgivings effectively, portraying NAFTA to rust-belt city voters as being ultimately responsible “for the loss of their high-paying manufacturing jobs”, driven by frequent shifts in production from the US to Mexico.

Key to Canadians is ensuring that trade and investment conditions do not worsen while avoiding any sense of being bullied by Trump (or more diplomatically, pressured). In doing so, they have both vulnerabilities and strengths.

In terms of vulnerabilities, the impact of tariff and non-tariff barriers – if taken across the board – would arguably have a greater effect on Canadian GDP than that of the US. For Canada, bilateral trade with the US is more than 60% of its national total, while for the US trade with Canada constitutes less than 20% of its GDP. Sectoral weaknesses are another problem: including in areas such as softwood lumber, oil and gas exports, and steel. The spike in American natural and shale gas production has proved challenging for Canadian producers. The promised go-ahead by Trump on the Keystone-XL pipeline transiting oil from the Albertan oil sands to US refineries on the Gulf Coast may grant Canada access to other markets for its oil and gas, but against a sluggish market, and in the face of recent US suggestions of transit tariffs.

In terms of strengths, Canada buys more from the US than any other country, it represents the primary commercial customer in 35 US states, and has US$351 million of direct investment in the US as at 2015, with one study suggesting that over eight million US jobs depend on Canadian trade and investment. In diplomatic terms, Canada can also draw on its membership of the (as yet unratified) 11-state Trans-Pacific Partnership (TPP) (from which the US withdrew in January 2017) and its newly ratified Comprehensive Economic and Trade Agreement with the EU. Nailing down a renewed, ‘tweaks-only’ NAFTA could represent a strong third platform for Canada in international trade. Canadian Foreign Affairs Minister Chrystia Freeland, said that “… the TPP as a deal cannot happen without the United States being a party to it”, but if Canada somehow manages to resurrect it, the country could subsequently position itself as a conduit of Pacific–US–Atlantic trade.

The North American Free Trade Agreement (NAFTA) has been instrumental when it comes to trade. It is an international agreement between Canada, Mexico and the U.S. It steered the economic, social and political development of the North American region. NAFTA was intended to bring positive effects in the development of North American countries; however, it has been shown that NAFTA has not only been positive, but it has also had its negative effects despite its intent to aid trade between the countries.

NAFTA has been a controversial agreement because it sped up the economic collaboration between the three countries and excited the rise of specific industries within those markets and aggravated the decline of others. Trade and other international social-economic relations may even cause serious conflicts and public concern to meet the conflict and public concerns more effectively, the NAFTA structure is updated from time to time, this allows the agreement to be improved in regards to current and prior public concerns.

NAFTA was a logical step to the alliance between member states because existing fiscal barriers and regulations prevented companies operating in Canada, Mexico, and the U.S. from free trade in the other’s market. As a result, the creation of NAFTA opened the way for the free trade and companies could develop their business on the territory of member states without any substantial obstacles from the part of local governments

The evolution of free trade agreement implied the free movement of goods between countries, but also the free movement of capital and human resources, which further integrated the three countries. Further integration did, however, raised several concerns. The U.S. faced the problem of the growing immigration from Mexico a natural consequence of the elimination of trade barriers between countries. Mexico faced the invasion of their domestic national companies by strong American and Canadian corporations, not only was there the issue of corporate takeover but also the loss of smaller local companies unable to compete with large multinational corporations/companies from the US and Canada. Canada also faced substantial difficulties associated with the expansion of American companies.

Many disadvantages that are created by NAFTA regulations and there is no doubt that one of the most significant problems is the U.S. job loss. The migration of U.S. and Canadian companies to Mexico make the workforce cost much less than the inflated cost of the U.S. The Economic effects are to this day are highly controversial. In one hand members of NAFTA benefited from the accelerated economic growth and cooperation between the three countries, and on the other hand, many companies are being ran to bankruptcy, there is deterioration of the local U.S. communities, because many employees in the US, lost their jobs as American companies outsourced and moved production facilities to Mexico, where labor costs are significantly lower when compared to the US or Canada.

The implementation of NAFTA regulations has had not only economic but also social effects. The rise of unemployment was closely intertwined with NAFTA. Outsourcing is the principal contributor to the rise of unemployment in the U.S. The growing unemployment in the U.S. was not the only effect of the implementation of NAFTA. Mexico and partially Canada faced the problem of their small and medium companies unable to compete with the larger multinational corporations based in the U.S. The large multinational corporations essentially swept away many of the medium and small companies. As a result, many businesses in Mexico and Canada have run bankrupt which has increased the social-economic tensions.

The influx of immigration from Mexico to the U.S. and partially to Canada was another effect of NAFTA. The agreement encouraged the free movement of goods, capital, and human resources and as a result, many Mexicans moved north to the U.S. and Canada in search of a better life. Not only was this a blow to the U.S. Labor force, but it also caused increased social tensions and competition in the local labor job markets. With the growing immigration, many Americans insisted on the change of immigration laws to stop the flow of immigrants from Mexico.

The controversy of NAFTA is obvious. As companies have reached their limits within national frontiers, they needed to enter international markets and NAFTA was their flagship. It has been the perfect tool for the fast economic market expansion. Large multinational corporations have penetrated new markets and have/ are establishing their control in taking the leading position of the ‘NAFTA economy’. It is understood that there is a need for the introduction of restrictions in terms of NAFTA. It is essential for the prevention of the further growth of the control of large corporations over national economies.

NAFTA needs changes to prevent its negative socioeconomic effects with Canada, Mexico, and the U.S. Policy makers should make NAFTA socially responsible and protect the interests of employees but not the interests of large corporations as NAFTA does at the moment.

Over the years many Canadians believed that free trade was not the best answer but as time went on these trade agreements showed that free trade is a positive outcome for a country.

The North American Free Trade Agreement which is also known as NAFTA is an agreement signed by Canada, Mexico, and the United States of American that came into effect on January 1st, 1994. This agreement established the world’s largest free-trade region involving over 400 million people and 11 trillion dollars in annual production. It established a new trading relationship based on more secure and more open access to each other’s markets. It was supposed to bring benefits to several sectors of the Canadian economy. Overall, consumers in all three countries were supposed to reap the benefits of the more efficient distribution of resources and by paying less for goods and services. This trade agreement advocates that capital owners win, workers win, consumers win therefore everyone is better off living under NAFTA. Many government officials, businesses, and citizens, however, have debated whether it has been beneficial to Canada. Supporters of free trade claim that because the agreement will increase trade throughout North America and moderate product prices, it will lead to creating new jobs in all three countries. NAFTA, while it has brought some cons for Canada, it has had a positive effect. The positive effects of job creation and higher wages has been outweighed by the negative effects on the manufacturing industry specifically, the auto sector. Also, Canada has succeeded in maintaining high labor standards and laws compare to its NAFTA partners due to the Canadian legislative environment that alleviates against downward harmonization.

One of the main issues by labor rights advocates was that increased trade liberalization would jeopardize the Canadian economy to compete with low-wage workers in Mexico and the southern United States. This was supposed to push investments away from Canada, especially from low-skilled industries, leading to plant closures and cutbacks resulting in job losses. It was further argued that the competitive environment would cause wages to decrease.

Gunderson simulated the possible impact of NAFTA and analyzed the expected wage and employment impact of trade liberalization. His study showed that the overall impacts are likely to be positive but extremely small for both Canada and the United States, as a job created associated with the export expansion is slightly higher than job destruction associated with increased imports. He also found that job gains would be at the high end of the wage spectrum, while job losses, which can be significant in some sectors, would be at the lower end. Opponents may argue that this is not beneficial to the economy as there are more people in Canada working in low-end jobs than there are in high-end jobs. When the low-end job workers are unable to find employment, they would be forced to go on social welfare such as unemployment insurance. This would cost the government more because the government would lose a source of income due to the elimination of tariffs, fewer people paying income tax, and supporting the unemployed through unemployment insurance and other welfare programs. However, this is not the case because studies have shown that NAFTA has did not affect unemployment, instead since NAFTA came into effect Canada’s employment rate has increased.

In a recent study conducted by the Bank of Montreal involving 109 senior executives in Canada, it concluded that most of the businesses have either hired more or employed the same number of people since NAFTA came into effect. Besides, most employers reported that NAFTA has not affected their labor costs and it has increased their productivity level. This increase in productivity may have to do with fear of relocation to the southern United States or Mexico. In Canada, 50 percent of the senior executives reported that they had hired more workers, 39 percent stated no changed in workforce size, and merely 11 percent reported they had lost workers. This study shows critics that NAFTA has not resulted in unemployment and companies have either hired more or employed the same number of people while increasing productivity levels.

A study conducted by Vicario, an economist with the North American Agreement on Labor Cooperation, supports the findings of the Bank of Montreal. Using Canada Labor Force statistics, she found that the average growth rate of employment from1994-1998 remained at 1.9 percent per year, or an annual increase of 258,000 jobs. Most of these jobs were full-time, as matters of fact, in 1998, 9 out of 10 jobs created were full-time. What is more surprising is that worker’s salaries increased by 2.6 percent between 1994 and 1997 and 0.3 percent in 1998. This study goes a step further because it proves to NAFTA critics that NAFTA has helped create jobs and increased wages for the employees. It is safe to say that employers are making a larger profit because they would only increase wages if their profits increased. This research shows that NAFTA has not only created jobs but also increased company profits and employee wages.

Kumar and Holmes conducted a study in the auto industry of Canada, a sector that NAFTA critics feared would have a harsh negative impact due to low-wage competition from Mexico and the southern United States. Their study concluded that production level and employment in the Canadian automotive parts industry grew significantly between 1991 and 1996. They further claim that there is no evidence to suggest that NAFTA has had any negative effects on the Canadian auto industry. Regardless of these positive effects, employers and unions have been pressured to reduce wages and cut jobs in the manufacturing sector. This is a small price to pay because overall Canada has become a richer country since NAFTA came into effect.

Overall, Canada has had a higher employment rate, higher company profits, and higher wages. According to Canadian unions, companies would invest where there are reasonably low labor and environment standards. These investment decisions and the threat to re-invest would consequently force governments to lower their labor standards to attract new or retain existing business. Although these fears are legitimate, studies have shown when investors choose a country to invest, they place the value of workforce, social, and political steadiness over labor cost. They do so because of high labor standards result in high levels of productivity and economic performance. Satisfied workers are an outcome of high wages and high workplace standards that results in a higher quality of performance. Higher safety standards have proven to reduce costly workplace accidents and save on health care bills. Freedom of association and collective bargaining will result in better cooperation between management and workers, thereby reducing if not eliminating costly strikes and improve social stability.

Since Canada has a higher rate of unionization than the United States thanks to Canada’s beneficial labor laws, downward harmonization posed a serious threat to Canadian unions. There are several factors that prevent downward harmonization in Canada. First, labor laws fall mainly under provincial jurisdiction and therefore, ideological forces are more influential. For example, the New Democratic Government in Ontario under the leadership of Bob Rae passed several pieces of pro-labor legislation such as the prohibition on the use of replacement workers. The social democratic governments in British Columbia and Saskatchewan have also passed several labor-friendly legislations to protect the interest of workers. The successful implementation of these legislations proves that NAFTA has strengthened Canadian labor standards and laws. Secondly, labor boards and independent arbitrators have enjoyed greater autonomy in enforcing their decisions through court orders in Canada. Over time, and with relevant court decisions, a significant body of ‘case law’ has developed, and it would be tough for pressure from free trade to weaken this base. In the United States, employers often use the means of courts to oppose decisions by the National Labor Relations Board. This, however, is not a problem in Canada. Third, unions in Canada are often more cautious and political than in the unions in the United States. Their constant support from left-leaning New Democratic Party governments has strengthened their agenda on the legislative process. In addition, their vigilance against free trade was in a large part responsible for public dissatisfaction of NAFTA in Canada, as shown in national polls, and making NAFTA an election issue. These kinds of tactics will most likely continue to prevent anti-labor laws being passed in Canada.

According to research conducted by Gunderson, four relationships must exist for downward harmonization of labor laws and standards to occur because of trade liberalization. First, labor laws must be implemented and actively enforced. Secondly, the laws must lead to an actual or perceived increase in labor costs to a business. Third, higher labor costs must discourage investments and influence plant location decisions. Fourth, jurisdictions must compete against each other for investments and jobs based on decreasing their costly labor laws. Though it is possible for the race to the lowest common denominator, considering the inter-connectivity of these relationships and the political and institutions influence working to prevent downwards harmonization, it is highly unlikely it will ever occur in Canada.

Many critics argue that there has been a decline in Canadian social standards, such as cutbacks in employment insurance, pensions, and health insurance since NAFTA came into effect. However, these cuts back are probably due to fiscal problems facing governments rather than NAFTA. There is also persistent pressure on both provincial and federal governments to cut taxes that may result in less spending on social welfare programs. Thus, the optimistic results of job-creating and higher wages have outweighed the negative results of the auto sector. Canada has also been able to maintain its high labor standards and laws compare to Mexico and the United States. Critics have argued that Canada would lose jobs due to re-location to other partners this has not been the case as studies have shown free trade has not resulted always in unemployment. NAFTA has shows to increase company profits, employee wages, create jobs and increase productivity levels. Though unions in the auto sector have been forced to reduce wages and cut jobs, it is a small price to pay for higher employment rates, higher company profits, higher wages, and the ability to retain business in Canada. Unions thought Canada would have to lower its labor standards and laws to compete with Mexico and the United States, however, studies have shown when investors choose a country to invest, they rank the quality of the workforce, political, and social stability above low labor cost. There are also several institutions and ideological forces in place that work against downward harmonization of labor standards. After 16 years of living under NAFTA, it is safe to assume that Canadian consumers will keep reaping up the benefits for many decades to come.

In 1994, the most controversial alliance between nations took its affect. NAFTA (North American Free Trade Agreement) was the agreement to have free trade between Canada, United States and Mexico. It was suppose to drastically increase trade and create jobs but in many ways had a reverse affect. The environment took a backseat to the money. With all the increase of trade, the pollution has increased and the quality of our raw materials has gone down. In addition, even though exports have gone up for Canada, the amount of imports has increased drastically. This has created a huge deficit for all three countries involved in NAFTA. In the original NAFTA agreement, it promised thousands of new jobs for Canadians when in fact we have lost more jobs then we have gained. NAFTA may have increased trade but at what cost?

The ten-year anniversary of NAFTA just dawned on Canadians this year. When our Prime Minister Brian Mulroney signed it in 1992, there were high hopes that our trade would never be the same. It promised us many things, such as increase trade, more jobs and stricter control on environmental issues. So far, these have all had opposite results. Exports are down 33% in Canada and imports are up 41%. Over 420,000 jobs have been lost between the three countries. Only 16 out of the 98 promised public utility projects have been approved and still only one has actually been completed. NAFTA did the opposite of what it promised and needs to be abolished.

On December 17, 1992, Canadian Prime Minister Brian Mulroney, Mexican President Carlos Salinas de Gortari, and U. S. President George Bush signed the North American Free Trade Agreement, marking the end of a process that began on February 5, 1991, when the three leaders announced they would negotiate the trade deal. It was suppose to usher in the new age of free trade and prosperous times for the countries. In a way it did have some of that affects but there were subliminal consequences for Canada. Massive increases of trade and exports were the number one goal of the agreement. Though exports have increased 24% between Canada and the US, a massive increase of imports has created a $29.5 billion deficit between Canada and the US. With no tariffs in place, the countries have been over importing from eachother and not enough of there own exporting.

Although NAFTA promised new jobs for the average Canadians, the fact that it was just as cheap to do things in Mexico and the US created a huge flocking of jobs south. Canada in fact lost more jobs then NAFTA created. Between 1993 and 1996, women lost 141,454 jobs to NAFTA, blacks lost 36,890 jobs, and Hispanics lost 22,520 jobs and in total of all three countries there was a loss of about 450,000 jobs directly due to NAFTA and only 100,000 created. Hourly wages of Canadian production workers have risen only 5.4 percent since 1990. This may seem like it doesn’t directly affect the average Canadian unless he/she lost her job but it does. NAFTA was suppose to be the cure for the recession of the 80’s but really was just a band-aid to the problem of the unstable economy Canada has. Two-thirds of our exports go to the US while we are still the weakest link in NAFTA only contributing 8 % of the increase in the total GDP

Another topic that somehow dropped off the media’s radar was NAFTA’s impact on the environment. In NAFTA’s wake, fewer than 1 percent of trucks entering the U.S. each year are inspected even though 50 percent of those inspected are rejected for major safety and environmental violations. Forty percent of the Mexican population in the border area have no sewers or drinkable water, likewise some 400,000 people on the U.S. side. How does this all affect Canada? The quality and price of these products we get are from these environment and poverty challenged places are affected. The air we breathe in is being diluted because of this sudden increase of trade. The Great Lakes have increased levels of toxic elements while the increase of trucks crossing the US-Canada border has.

The North American Free Trade Agreement (NAFTA) is a treaty among Canada, the United States and Mexico that eliminated most of the barriers to free trade among the 3 countries. The agreement means purchasing certain items from NAFTA countries is often cheaper than buying similar goods from non-NAFTA countries. Thanks to NAFTA, enjoying Mexican avocados year-round is easy. Similarly, Canadians can save big by buying an American-manufactured car versus a model from Europe. Goods from NAFTA nations are imported tariff-free, based on NAFTA’s rules of origin. These rules state the percentage of the product’s content that must originate in the member country. The GDP of the three countries in 2012 was the following: Canada, US$1.82 billion; Mexico, US$1.18 billion; and the U.S., US$15.47 billion (World Economic Outlook Database, 2013).

Since the North American Free Trade Agreement (NAFTA) took effect in 1994, a number of disputes have arisen, and different sectors of the three member countries have complained about different issues (Vega, 2005). Nonetheless, economic exchange, investment, and migration flows among the three countries have increased (Weintraub, 2004). During this period, economic interdependence between the Unit ed States and Canada as well as between the U.S. and Mexico has increased (Cha- bat, 2000). However, the Canadian-Mexican trading relationship continues to be of small significance.

It is important to remember that the NAFTA was promoted in the 1980s by the U.S. Republican administration and President Ronald Reagan, who proposed a new relationship between North American countries. This tactic was especially designed to rehearse the U.S. American project to have more influence in the world economy (Mosco, 1990). In other words, this agreement was based on the commercial and political direction that the U.S. The focus on renegotiating the North American Free Trade Agreement (NAFTA) certainly accentuated the challenges of geography and economics.

NAFTA is historic in terms of setting the rules for regional trade. Coming into force in 1994 as the first free trade agreement between two developed and one developing country, NAFTA created a trilateral bloc for free trade in goods and services. At first blush, the numbers appear impressive. Between 1993 and 2015, merchandise trade between the three countries tripled to US$1 trillion, with Canadian exports to the US growing annually at 4.6%. NAFTA as a whole accounts for more than a quarter of the world’s gross domestic product (GDP). Canada and the US together constitute the world’s largest bilateral trading relationship, comprising US$663 billion in goods and services in 2015, of which Canada purchased US$337 billion, and with US$2 billion in trade crossing the US–Canada border each day.

NAFTA’s overall impact, however, is debatable, and arguably uneven. On the one hand, the Canadian government suggests that “since the Canada–U.S. Free Trade Agreement came into force in 1989, Canada’s two-way trade in goods and services with the United States has more than tripled”. Others suggest that this previous agreement had a much bigger impact on Canada’s economy than NAFTA, that Canada’s trade with Mexico is negligible, and that NAFTA’s effect on the US itself has been small. From these perspectives, NAFTA appears in need of an overhaul given the deeply uneven effects of free trade. Trump played on such misgivings effectively, portraying NAFTA to rust-belt city voters as being ultimately responsible “for the loss of their high-paying manufacturing jobs”, driven by frequent shifts in production from the US to Mexico.

Key to Canadians is ensuring that trade and investment conditions do not worsen while avoiding any sense of being bullied by Trump (or more diplomatically, pressured). In doing so, they have both vulnerabilities and strengths.

In terms of vulnerabilities, the impact of tariff and non-tariff barriers – if taken across the board – would arguably have a greater effect on Canadian GDP than that of the US. For Canada, bilateral trade with the US is more than 60% of its national total, while for the US trade with Canada constitutes less than 20% of its GDP. Sectoral weaknesses are another problem: including in areas such as softwood lumber, oil and gas exports, and steel. The spike in American natural and shale gas production has proved challenging for Canadian producers. The promised go-ahead by Trump on the Keystone-XL pipeline transiting oil from the Albertan oil sands to US refineries on the Gulf Coast may grant Canada access to other markets for its oil and gas, but against a sluggish market, and in the face of recent US suggestions of transit tariffs.

In terms of strengths, Canada buys more from the US than any other country, it represents the primary commercial customer in 35 US states, and has US$351 million of direct investment in the US as at 2015, with one study suggesting that over eight million US jobs depend on Canadian trade and investment. In diplomatic terms, Canada can also draw on its membership of the (as yet unratified) 11-state Trans-Pacific Partnership (TPP) (from which the US withdrew in January 2017) and its newly ratified Comprehensive Economic and Trade Agreement with the EU. Nailing down a renewed, ‘tweaks-only’ NAFTA could represent a strong third platform for Canada in international trade. Canadian Foreign Affairs Minister Chrystia Freeland, said that “… the TPP as a deal cannot happen without the United States being a party to it”, but if Canada somehow manages to resurrect it, the country could subsequently position itself as a conduit of Pacific–US–Atlantic trade.

The North American Free Trade Agreement (NAFTA) has been instrumental when it comes to trade. It is an international agreement between Canada, Mexico and the U.S. It steered the economic, social and political development of the North American region. NAFTA was intended to bring positive effects in the development of North American countries; however, it has been shown that NAFTA has not only been positive, but it has also had its negative effects despite its intent to aid trade between the countries.

NAFTA has been a controversial agreement because it sped up the economic collaboration between the three countries and excited the rise of specific industries within those markets and aggravated the decline of others. Trade and other international social-economic relations may even cause serious conflicts and public concern to meet the conflict and public concerns more effectively, the NAFTA structure is updated from time to time, this allows the agreement to be improved in regards to current and prior public concerns.

NAFTA was a logical step to the alliance between member states because existing fiscal barriers and regulations prevented companies operating in Canada, Mexico, and the U.S. from free trade in the other’s market. As a result, the creation of NAFTA opened the way for the free trade and companies could develop their business on the territory of member states without any substantial obstacles from the part of local governments

The evolution of free trade agreement implied the free movement of goods between countries, but also the free movement of capital and human resources, which further integrated the three countries. Further integration did, however, raised several concerns. The U.S. faced the problem of the growing immigration from Mexico a natural consequence of the elimination of trade barriers between countries. Mexico faced the invasion of their domestic national companies by strong American and Canadian corporations, not only was there the issue of corporate takeover but also the loss of smaller local companies unable to compete with large multinational corporations/companies from the US and Canada. Canada also faced substantial difficulties associated with the expansion of American companies.

Many disadvantages that are created by NAFTA regulations and there is no doubt that one of the most significant problems is the U.S. job loss. The migration of U.S. and Canadian companies to Mexico make the workforce cost much less than the inflated cost of the U.S. The Economic effects are to this day are highly controversial. In one hand members of NAFTA benefited from the accelerated economic growth and cooperation between the three countries, and on the other hand, many companies are being ran to bankruptcy, there is deterioration of the local U.S. communities, because many employees in the US, lost their jobs as American companies outsourced and moved production facilities to Mexico, where labor costs are significantly lower when compared to the US or Canada.

The implementation of NAFTA regulations has had not only economic but also social effects. The rise of unemployment was closely intertwined with NAFTA. Outsourcing is the principal contributor to the rise of unemployment in the U.S. The growing unemployment in the U.S. was not the only effect of the implementation of NAFTA. Mexico and partially Canada faced the problem of their small and medium companies unable to compete with the larger multinational corporations based in the U.S. The large multinational corporations essentially swept away many of the medium and small companies. As a result, many businesses in Mexico and Canada have run bankrupt which has increased the social-economic tensions.

The influx of immigration from Mexico to the U.S. and partially to Canada was another effect of NAFTA. The agreement encouraged the free movement of goods, capital, and human resources and as a result, many Mexicans moved north to the U.S. and Canada in search of a better life. Not only was this a blow to the U.S. Labor force, but it also caused increased social tensions and competition in the local labor job markets. With the growing immigration, many Americans insisted on the change of immigration laws to stop the flow of immigrants from Mexico.

The controversy of NAFTA is obvious. As companies have reached their limits within national frontiers, they needed to enter international markets and NAFTA was their flagship. It has been the perfect tool for the fast economic market expansion. Large multinational corporations have penetrated new markets and have/ are establishing their control in taking the leading position of the ‘NAFTA economy’. It is understood that there is a need for the introduction of restrictions in terms of NAFTA. It is essential for the prevention of the further growth of the control of large corporations over national economies.

NAFTA needs changes to prevent its negative socioeconomic effects with Canada, Mexico, and the U.S. Policy makers should make NAFTA socially responsible and protect the interests of employees but not the interests of large corporations as NAFTA does at the moment.

Over the years many Canadians believed that free trade was not the best answer but as time went on these trade agreements showed that free trade is a positive outcome for a country.

The North American Free Trade Agreement which is also known as NAFTA is an agreement signed by Canada, Mexico, and the United States of American that came into effect on January 1st, 1994. This agreement established the world’s largest free-trade region involving over 400 million people and 11 trillion dollars in annual production. It established a new trading relationship based on more secure and more open access to each other’s markets. It was supposed to bring benefits to several sectors of the Canadian economy. Overall, consumers in all three countries were supposed to reap the benefits of the more efficient distribution of resources and by paying less for goods and services. This trade agreement advocates that capital owners win, workers win, consumers win therefore everyone is better off living under NAFTA. Many government officials, businesses, and citizens, however, have debated whether it has been beneficial to Canada. Supporters of free trade claim that because the agreement will increase trade throughout North America and moderate product prices, it will lead to creating new jobs in all three countries. NAFTA, while it has brought some cons for Canada, it has had a positive effect. The positive effects of job creation and higher wages has been outweighed by the negative effects on the manufacturing industry specifically, the auto sector. Also, Canada has succeeded in maintaining high labor standards and laws compare to its NAFTA partners due to the Canadian legislative environment that alleviates against downward harmonization.

One of the main issues by labor rights advocates was that increased trade liberalization would jeopardize the Canadian economy to compete with low-wage workers in Mexico and the southern United States. This was supposed to push investments away from Canada, especially from low-skilled industries, leading to plant closures and cutbacks resulting in job losses. It was further argued that the competitive environment would cause wages to decrease.

Gunderson simulated the possible impact of NAFTA and analyzed the expected wage and employment impact of trade liberalization. His study showed that the overall impacts are likely to be positive but extremely small for both Canada and the United States, as a job created associated with the export expansion is slightly higher than job destruction associated with increased imports. He also found that job gains would be at the high end of the wage spectrum, while job losses, which can be significant in some sectors, would be at the lower end. Opponents may argue that this is not beneficial to the economy as there are more people in Canada working in low-end jobs than there are in high-end jobs. When the low-end job workers are unable to find employment, they would be forced to go on social welfare such as unemployment insurance. This would cost the government more because the government would lose a source of income due to the elimination of tariffs, fewer people paying income tax, and supporting the unemployed through unemployment insurance and other welfare programs. However, this is not the case because studies have shown that NAFTA has did not affect unemployment, instead since NAFTA came into effect Canada’s employment rate has increased.

In a recent study conducted by the Bank of Montreal involving 109 senior executives in Canada, it concluded that most of the businesses have either hired more or employed the same number of people since NAFTA came into effect. Besides, most employers reported that NAFTA has not affected their labor costs and it has increased their productivity level. This increase in productivity may have to do with fear of relocation to the southern United States or Mexico. In Canada, 50 percent of the senior executives reported that they had hired more workers, 39 percent stated no changed in workforce size, and merely 11 percent reported they had lost workers. This study shows critics that NAFTA has not resulted in unemployment and companies have either hired more or employed the same number of people while increasing productivity levels.

A study conducted by Vicario, an economist with the North American Agreement on Labor Cooperation, supports the findings of the Bank of Montreal. Using Canada Labor Force statistics, she found that the average growth rate of employment from1994-1998 remained at 1.9 percent per year, or an annual increase of 258,000 jobs. Most of these jobs were full-time, as matters of fact, in 1998, 9 out of 10 jobs created were full-time. What is more surprising is that worker’s salaries increased by 2.6 percent between 1994 and 1997 and 0.3 percent in 1998. This study goes a step further because it proves to NAFTA critics that NAFTA has helped create jobs and increased wages for the employees. It is safe to say that employers are making a larger profit because they would only increase wages if their profits increased. This research shows that NAFTA has not only created jobs but also increased company profits and employee wages.

Kumar and Holmes conducted a study in the auto industry of Canada, a sector that NAFTA critics feared would have a harsh negative impact due to low-wage competition from Mexico and the southern United States. Their study concluded that production level and employment in the Canadian automotive parts industry grew significantly between 1991 and 1996. They further claim that there is no evidence to suggest that NAFTA has had any negative effects on the Canadian auto industry. Regardless of these positive effects, employers and unions have been pressured to reduce wages and cut jobs in the manufacturing sector. This is a small price to pay because overall Canada has become a richer country since NAFTA came into effect.

Overall, Canada has had a higher employment rate, higher company profits, and higher wages. According to Canadian unions, companies would invest where there are reasonably low labor and environment standards. These investment decisions and the threat to re-invest would consequently force governments to lower their labor standards to attract new or retain existing business. Although these fears are legitimate, studies have shown when investors choose a country to invest, they place the value of workforce, social, and political steadiness over labor cost. They do so because of high labor standards result in high levels of productivity and economic performance. Satisfied workers are an outcome of high wages and high workplace standards that results in a higher quality of performance. Higher safety standards have proven to reduce costly workplace accidents and save on health care bills. Freedom of association and collective bargaining will result in better cooperation between management and workers, thereby reducing if not eliminating costly strikes and improve social stability.

Since Canada has a higher rate of unionization than the United States thanks to Canada’s beneficial labor laws, downward harmonization posed a serious threat to Canadian unions. There are several factors that prevent downward harmonization in Canada. First, labor laws fall mainly under provincial jurisdiction and therefore, ideological forces are more influential. For example, the New Democratic Government in Ontario under the leadership of Bob Rae passed several pieces of pro-labor legislation such as the prohibition on the use of replacement workers. The social democratic governments in British Columbia and Saskatchewan have also passed several labor-friendly legislations to protect the interest of workers. The successful implementation of these legislations proves that NAFTA has strengthened Canadian labor standards and laws. Secondly, labor boards and independent arbitrators have enjoyed greater autonomy in enforcing their decisions through court orders in Canada. Over time, and with relevant court decisions, a significant body of ‘case law’ has developed, and it would be tough for pressure from free trade to weaken this base. In the United States, employers often use the means of courts to oppose decisions by the National Labor Relations Board. This, however, is not a problem in Canada. Third, unions in Canada are often more cautious and political than in the unions in the United States. Their constant support from left-leaning New Democratic Party governments has strengthened their agenda on the legislative process. In addition, their vigilance against free trade was in a large part responsible for public dissatisfaction of NAFTA in Canada, as shown in national polls, and making NAFTA an election issue. These kinds of tactics will most likely continue to prevent anti-labor laws being passed in Canada.

According to research conducted by Gunderson, four relationships must exist for downward harmonization of labor laws and standards to occur because of trade liberalization. First, labor laws must be implemented and actively enforced. Secondly, the laws must lead to an actual or perceived increase in labor costs to a business. Third, higher labor costs must discourage investments and influence plant location decisions. Fourth, jurisdictions must compete against each other for investments and jobs based on decreasing their costly labor laws. Though it is possible for the race to the lowest common denominator, considering the inter-connectivity of these relationships and the political and institutions influence working to prevent downwards harmonization, it is highly unlikely it will ever occur in Canada.

Many critics argue that there has been a decline in Canadian social standards, such as cutbacks in employment insurance, pensions, and health insurance since NAFTA came into effect. However, these cuts back are probably due to fiscal problems facing governments rather than NAFTA. There is also persistent pressure on both provincial and federal governments to cut taxes that may result in less spending on social welfare programs. Thus, the optimistic results of job-creating and higher wages have outweighed the negative results of the auto sector. Canada has also been able to maintain its high labor standards and laws compare to Mexico and the United States. Critics have argued that Canada would lose jobs due to re-location to other partners this has not been the case as studies have shown free trade has not resulted always in unemployment. NAFTA has shows to increase company profits, employee wages, create jobs and increase productivity levels. Though unions in the auto sector have been forced to reduce wages and cut jobs, it is a small price to pay for higher employment rates, higher company profits, higher wages, and the ability to retain business in Canada. Unions thought Canada would have to lower its labor standards and laws to compete with Mexico and the United States, however, studies have shown when investors choose a country to invest, they rank the quality of the workforce, political, and social stability above low labor cost. There are also several institutions and ideological forces in place that work against downward harmonization of labor standards. After 16 years of living under NAFTA, it is safe to assume that Canadian consumers will keep reaping up the benefits for many decades to come.

In 1994, the most controversial alliance between nations took its affect. NAFTA (North American Free Trade Agreement) was the agreement to have free trade between Canada, United States and Mexico. It was suppose to drastically increase trade and create jobs but in many ways had a reverse affect. The environment took a backseat to the money. With all the increase of trade, the pollution has increased and the quality of our raw materials has gone down. In addition, even though exports have gone up for Canada, the amount of imports has increased drastically. This has created a huge deficit for all three countries involved in NAFTA. In the original NAFTA agreement, it promised thousands of new jobs for Canadians when in fact we have lost more jobs then we have gained. NAFTA may have increased trade but at what cost?

The ten-year anniversary of NAFTA just dawned on Canadians this year. When our Prime Minister Brian Mulroney signed it in 1992, there were high hopes that our trade would never be the same. It promised us many things, such as increase trade, more jobs and stricter control on environmental issues. So far, these have all had opposite results. Exports are down 33% in Canada and imports are up 41%. Over 420,000 jobs have been lost between the three countries. Only 16 out of the 98 promised public utility projects have been approved and still only one has actually been completed. NAFTA did the opposite of what it promised and needs to be abolished.

On December 17, 1992, Canadian Prime Minister Brian Mulroney, Mexican President Carlos Salinas de Gortari, and U. S. President George Bush signed the North American Free Trade Agreement, marking the end of a process that began on February 5, 1991, when the three leaders announced they would negotiate the trade deal. It was suppose to usher in the new age of free trade and prosperous times for the countries. In a way it did have some of that affects but there were subliminal consequences for Canada. Massive increases of trade and exports were the number one goal of the agreement. Though exports have increased 24% between Canada and the US, a massive increase of imports has created a $29.5 billion deficit between Canada and the US. With no tariffs in place, the countries have been over importing from eachother and not enough of there own exporting.

Although NAFTA promised new jobs for the average Canadians, the fact that it was just as cheap to do things in Mexico and the US created a huge flocking of jobs south. Canada in fact lost more jobs then NAFTA created. Between 1993 and 1996, women lost 141,454 jobs to NAFTA, blacks lost 36,890 jobs, and Hispanics lost 22,520 jobs and in total of all three countries there was a loss of about 450,000 jobs directly due to NAFTA and only 100,000 created. Hourly wages of Canadian production workers have risen only 5.4 percent since 1990. This may seem like it doesn’t directly affect the average Canadian unless he/she lost her job but it does. NAFTA was suppose to be the cure for the recession of the 80’s but really was just a band-aid to the problem of the unstable economy Canada has. Two-thirds of our exports go to the US while we are still the weakest link in NAFTA only contributing 8 % of the increase in the total GDP

Another topic that somehow dropped off the media’s radar was NAFTA’s impact on the environment. In NAFTA’s wake, fewer than 1 percent of trucks entering the U.S. each year are inspected even though 50 percent of those inspected are rejected for major safety and environmental violations. Forty percent of the Mexican population in the border area have no sewers or drinkable water, likewise some 400,000 people on the U.S. side. How does this all affect Canada? The quality and price of these products we get are from these environment and poverty challenged places are affected. The air we breathe in is being diluted because of this sudden increase of trade. The Great Lakes have increased levels of toxic elements while the increase of trucks crossing the US-Canada border has.