American Free Trade Agreement example essay topic

When the Soviet Union collapsed and the Cold War finally rolled over, the United States emerged the victor. And with it, the notions of democracy, capitalism and constitutional law achieved hegemony on a global scale. The nation-building siege perpetrated by two battling superpowers was, at least on a superficial ideological level, a showdown between totalitarian communism and electoral democracy. So an American victory implied to many a validation of all those values for which the Cold War had been fought. This philosophical resolution, crossbred with a vacuum in adversarial power, has given way to the twenty-first century American crusade. Labeled imperialism and colonialism by critics, the overarching aspiration in determining U.S. behavior on an international scale is regarded as globalism by idealists.

In particular, those in service of America on a level of federal governance tend to refer this way to the economic, military and diplomatic initiatives that make up our foreign policy. Underlying the globalism term is the tenet that all efforts which can be parlayed into bringing America's progress to the rest of world need be employed. At its extreme, globalism can result in the type of aggression that we " ve witnessed most recently in both Iraq and Afghanistan, where America operated on the pretense that both backwards nations would be kicked up to speed by the intervention. But even prior to President Bush's decidedly confrontational methods of globalization, the United States took advantage of the Cold War's aftermath to make quick headway on its own continental body. During the Clinton administration, the United States sought to extend the prominence of its authority by drafting the North American Free Trade Agreement. Essentially an extension of the Canada Free Trade Agreement of 1988, NAFTA brought the gradually developing Mexico into the fold.

Both agreements were centered on the notion of lessening and eliminating financial trade barriers between the three nations. Essentially a bill of deregulation, NAFTA promulgated a timeline on which all trade tariffs-some outright and some gradually over a space of five, ten or fifteen years-would be lessened or eliminated. The intent was to create a free flow of trade in North America, breaking down many of the factors that prevented unencumbered exchange between Canada, Mexico and the United States. NAFTA was not an entirely new phenomenon of global integration as it followed in the footsteps of the Canadian agreement in which many deregulatory measures of the same nature were enacted. Likewise, it bolstered a Mexican economic liberalization that began in earnest in the early eighties, where the relationship between Mexico and the international trade community began to undergo a legitimate intimation.

So in 1993, as the Clinton administration started to rev its engine over the introduction of the NAFTA arrangement, it already was a foregone conclusion in many ways that the integration of the three major North American economies was edging toward ever more inextricable cohesion. This certainty did nothing to curtail the intense public debate that supplemented the introduction of NAFTA though, as divergent prognostications as to its effectiveness and its intentions drove concerned parties into two stolidly oppositional camps. Clinton enjoyed bipartisan congressional support on the matter but the agreement placed a host of special interest groups at odds. Endorsing the dismantling of trade tariffs and other regulatory roadblocks to import and export operations, large corporate bodies in the automotive and agricultural industries for example, stood to gain the most from NAFTA.

Conversely, environmental organizations, American labor and farmer groups and international human rights activists viewed NAFTA as a contract with devastating implications to populations on all sides. While NAFTA was nominally structured to bring all three nations closer together in terms of trading confines, the process of integration between the U.S. and Canada had already received its most significant boost as a result of the 1988 agreement. And due both to the comparable nature of their economies, and their respective previously existent tendencies toward open international trade, the United States and Canada were natural partners. So when NAFTA went into action in 1994, it was more inclined to deal with the unique quandary of Mexico.

A gradually developing nation with a history mired in economic crisis, Mexico had long been a socialized nation with doors perpetually closed to international economic involvement. Starting in the 1980's, though, the nation made strides toward international inclusion as "it privatized and deregulated a number of state enterprises, including banks, and it brought inflation down from a peak of 187.8 percent in 1987 to 6.4 percent in 1994. It also liberalized restrictions on foreign investment in Mexico". (CBO, 2) In accordance with this directive, liberalizing trade with Mexico, for both Canada and the United States, was the prime operative of NAFTA.

More directly, given the far greater flux of goods between the two nations, the United States and Mexico were the true partners of the NAFTA with Canada existing somewhat to the periphery (though it bears noting that the agreement would substantially, as intended, boost trade between Mexico and Canada as well.) At its roots though, NAFTA came into existence with the proposed mission of bringing Mexico up to international standards in all respects by integrating it into the world economy. The viability of such an ambition is subject to much question though. Leading into the agreement "the gap between average U.S. and Mexican wages [was] about 8-to-1, which is twice as large as the wage gap between the European Union's richest and poorest members". (Anderson, 1) NAFTA's grandest vision seemed to offer little recourse for that imbalance.

And even now, a decade after its inception, NAFTA is an exceedingly controversial agreement, inviting praise from many parties for its apparent success and suffering many slings at the hands of its critics, who feel validated in their initial concerns by evidence abounding on both sides of the border. In the United States, for some, there is much to approve of with reference to NAFTA's effectiveness. As intended, the reduction and absence of tariffs has been true to its raison d'^etre, encouraging an undeniable boon in trade across the Mexican-American border, wherein "U.S. trade with Mexico has grown substantially -- in absolute dollar terms, as a percentage of U.S. GDP, and relative to U.S. trade with other countries". (CBO, 6) The agreement shuttled Mexico past Japan to make it second only behind Canada on the list of nations most heavily engaged in trade with the United States. American exportation to Mexico has more than doubled since NAFTA began and, likewise, Mexican exports to the United States have achieved nearly the same percentage level of growth.

In addition, NAFTA seems to have inherently addressed one of the prevailing objections to its enactment in its creation of American jobs. The prospect that such deregulation would incline American corporations to set up cheap labor shops south of the border was not unjustified. But the idea of lost American jobs, which so greatly a feared free trade objection ists, has been rectified to an extent by the job creation which NAFTA's increased American export productivity incited. In strictly mathematical terms "exports to Mexico in 1998 supported almost a million jobs, up over 350,000 jobs from 1993. Jobs supported by exports pay 13 to 16 percent more than other U.S. jobs".

(Fitzgerald, 1) The cold hard numbers, especially those which represent American corporate growth in the wake of free trade opportunities, strongly suggest that NAFTA is functioning appropriately. But its drawbacks are many, and they all seem to point to the same theoretical culprit. The notion of free trade as a method of globalization suffers most fundamentally from the faulty supposition that integration of economies alone is enough to combat international disparity. But in the case of Mexico and America, such disparity has only been exacerbated in many ways.

In the immediate onset of NAFTA, the adjustment was devastating to the Mexican economy. Though the trade agreement alone can not be held responsible (as previous efforts at trade liberalization helped lay the groundwork for such calamity) the intrusion of the American dollar-in terms of investment -- on Mexican soil exploited the overvalued peso, which responded by collapsing into sky-high inflation. Due to a great deal of American aid, the peso has since recovered. But the incident exposed the rudimentary trouble in integrating a superpower's economy with that of a developing third world nation. Just as the Mexican dollar could not compete for value with the American dollar, so too do Mexican industries find competition with American products near impossible. Without tariffs, it stands to reason that Mexico's influx of products would come from the United States, as opposed to the rest of the world, at a rate of 85%.

This, in addition to the U.S. federal capacity to greatly subsidize its farming industry-an ability which is far beyond the reach of the modest Mexican federal budget-makes for a product far cheaper than that which the independent Mexican farmer can offer. America's ability to export to Mexico has lined well the pockets of the U.S. agricultural corporate structure. And it has rendered Mexican farmers incapable of competing for market share. Without tariffs in place to curtail the flood of American goods, Mexican domestic productivity has suffered incomparably. "And while it may be true that several hundred thousand new jobs have been created on the Mexican side of the border as a result of increased exports to the U.S. and Canada, wages are low, working conditions poor, and the environmental nightmare spreads". (Anderson, 3) Rural Mexico is reeling in a state of permanent economic disaster and the poverty levels amongst farmers, laborers and others ousted from employment by American premiums has risen drastically in the last decade.

Like many of the international agreements that work with an inclination toward practices of free global trade, NAFTA is delivering on its promise of American prosperity, at least from a corporate standpoint. But, to say nothing of the lower environmental and human rights standards that American corporations are able to implement after relocation to Mexico, NAFTA's realization of a projection of progress seems contained to American soil. Even as a corporate presence grows stronger in Mexico, the vast members of the population who entered NAFTA impoverished now have even fewer opportunities to transcend those shackles. Young and unproven, globalization in general will inevitably undergo revision in the years to come. And if NAFTA is to serve as a vehicle to the successful and inclusive integration of this generally prosperous continent, than it must orient itself toward a progress that is social, cultural and economic rather than strictly corporate. And above all else, it must evolve into an agreement designed to bring strength to both sides rather than to consolidate the superiority of one.

Anderson, Sarah. North American Free Trade Agreement. Institute for Policy Studies Vol. 2, No. 1.1997. Congressional Budget Offices. The effects of NAFTA of U.S. -Mexican trade and GDP.

Section 3.2003. Fitzgerald, Sara. The effects of NAFTA on jobs, exports and the environment: Myth vs. Reality. Research: Trade and Foreign Aid.

2001.