NAFTA Post-Ratification: Worsening North America’s Environment and Inhabitance for the Long Run

A treaty between the three biggest countries of North America, the United States, Canada, and Mexico came to an agreement to uplift barriers for trading in hopes of eliminating tariffs and increasing investment opportunities. The dominance of world trade is reflected in the regional and international trade organizations formed to promote the reduction or elimination of other countries’ tariff and non-tariff barriers to foreign commerce. The implementation of the North America Free Trade Agreement, or NAFTA, globally created the largest free trade area between the three nations, to which has tripled since the agreement was enacted on January 1, 1994.

However, many politicians believe that the post-agreement of NAFTA was incredibly controversial; for instance, while the US economy has increased in profit due to the free trade because of the reduction and elimination of tariffs, most of Mexico’s agriculture business and land deteriorated while Canada exploited their shale fields for oil. The high price of “free” trade ultimately created a societal and financial downfall for mainly the United States and Mexico long term, while environmentally draining Canada and Mexico’s fertile and sustainable land to export normal goods. Evidentially, the post effects of NAFTA economically, socially, and ecologically shifted the overall state of all three nations, and produced mixed results once ratified throughout the countries.

The Social Conquest: The Rise of Immigration

Before NAFTA was ratified, Presidents Bush and Clinton countered that the agreement would create hundreds of thousands of new jobs a year, while Mexican President Carlos Salinas de Gortiari saw it as an opportunity to modernize the Mexican economy so that it would “export goods, not people”. Unfortunately, the agreement did the exact opposite. Immigration is one of the many battles the US faces, to which NAFTA evidentially made worse. Because of the job loss in Mexico and the limited jobs available along the US-Mexico border, “it forced unemployed farmers to cross the border illegally to find work. In 1995, there were 2.9 million Mexicans living in the United States illegally.” Because there was so much flourishment within Canada and the US with the US neighboring Mexico, it was easier to illegally cross the border and live within the US then make the trip to Canada to which had stricter security at the time.

As the Los Angeles Times stated, “Roughly 24 million Mexicans live in rural areas supporting themselves on small farms. NAFTA will force millions of them off the land faster than it creates jobs for them in Mexico's industries. The net result: Up to 20 million people will leave Mexico's countryside and flood into its cities over the next generation.” Going back to the economic standpoint of NAFTA, the increase in free trade will eventually force Mexicans to migrate to the US and thus increase the US population exponentially. The unintentional butterfly effect of NAFTA and the increased immigration led to an increase in employment to Mexicans in American agriculture, and the hasty generalization of Mexicans stealing the jobs of the Americans. Because it was cheaper to export the subsidized crops into the US, the US market lowered its prices on agricultural foods. Because expenses were lower, it generated revenue for the US economy, boosting company enterprises for a good period of time. However, around 2007, unemployment began to increase due to companies sending jobs away to Mexico for cheaper pay. Eventually, the recession drove that figure to 6.9 million in 2007. In 2014, it fell to 5.8 million, roughly double where it was before NAFTA.

The Global Economy: A Battle for Financial Stability

One of the major advantages of NAFTA -its intended purpose- was that it increased trade and generated an abundance amount of revenue due to domestic and foreign imports and exports. The U.S. International Trade Commission (ITC) issued its report: The Impact of Trade Agreements, stating that between 1974 and 2001, the value of U.S. exports and imports grew from $0.5 trillion to $2.5 trillion. The free trade agreement also created more jobs within the United States, yet it came with some backlash for Mexico, Canada, and some manufacturers of the US. Because of the tariff reduction and elimination for normal and luxury goods, the nations sought out to obtain foreign imports because of the cost difference; it was cheaper to import agricultural goods from Mexico due to the elimination of high-end taxes. Once ratified, “Mexico sold close to $60 billion more to the U.S. than it would buy from its northern neighbor”. For Mexico, the exportation is what generates revenue, but the free trade also exploited Mexican workers into accepting less pay due to threatened job migration. As stated in Interpreting NAFTA: The Science and Art of Political Analysis by Frederick Mayer, Independent candidate Ross Perot began warning that NAFTA would create a “sucking sound” of US jobs going to Mexico. Unfortunately, companies threatened to move their businesses into Mexico in order to prevent jobs from forming unions and bargaining for better wages. That, NAFTA may have created jobs because of increased trade demanding employment, but workers were forced to abide by the rules of the companies in hopes of retaining their jobs at the desired pay of the given company.

An unfortunate consequence to NAFTA was that it placed Mexican farmers out of business. Because of the foreign direct investment that doubled since NAFTA’s ratification, the US imported subsidized farm products into Mexico such as corn, soy, and wheat. Because farmers could not compete with such products at high demand, farmers eventually went out of business and lost their jobs. According to the Economic Policy Institute, approximately 1.3 million farmers were unemployed from the aftermath of the ratification. Also, some states within the US were affected by NAFTA, which generated a US total of roughly 750,000 terminated US jobs. States like Texas, California, Michigan, and Missouri deal with manufacturing, automobiles, textiles, and computers. Wages in Mexico are a fraction of what they are within the US, to which all major American car makers now have factories south of the US-Mexican border. Though the mechanical manufacturing business has unwaged Americans of close to 750,00 jobs and has exploited Mexican consent of them, the US has levied itself away from another catastrophic economy since the Great Depression within the 1930s, with Mexico’s export revenue soaring compared to the sign-on developed countries.

The Environmental Aftermath: Mexico and Canada’s Degradation

Canada and Mexico’s lands suffered greatly from the ratification of NAFTA, with Mexico’s agricultural lands in ruin and Canada’s shale oil fields deteriorating. Mexico also suffers a succession of land due to NAFTA; because farmers become unemployed because of subsidized crops, most of their lands are not properly tended to, and thus deteriorate and degrade over time. Yet under NAFTA, Canada applies open market principles and is obliged to trade its major energy resources without excessive regulation. Without any policies to normalize Canada’s oil and manufacturing production, Canada produces way more than its population would routinely recommend, especially since Canada’s main role within NAFTA was the exportation of its normal goods, whereas Mexico profited off manufacturing. Canada currently produces over 10% of the world's supply of aluminum, 5% of its copper, 9% of gypsum, 12% of nickel, 15% of wood pulp, 23% of newsprint, and almost about 30% of the world’s supply of potash fertilizers—all for a country that has less than 0.5% of the global population. Due to a continuous increase in productivity with no tariffs on oil and metals, the US sells its oil at a cheap price, but at the cost of the non-renewability of Canada’s lands and metals. Such high energy increases Carbon dioxide emissions into the atmosphere, to which pollutes the air individuals breathe and is one of the covalent bonds that decreases the security of Earth’s ozone layer. Despite the succession of land and pollution, Canada continues to produce such commodities with hopes to gain a larger profit.

Conclusion: The Birth of USMCA

Just recently the treaty has been renegotiated to abide to Trump’s vision of the business, to which Trump threatened to pull the US from if NAFTA was not shaped around his requirements. Believing it to be one of the worst trade deals made in history, the United States-Mexico-Canada Treatment, or USMCA, significantly changed certain requirements for mainly manufacturing and the expansion of more normal goods being allowed for importation. Under the USMCA, in order for a car or truck to be exempt from tariffs, 75 percent of its components would have to be manufactured in North America. Under NAFTA, the corresponding requirement had been only 62.5 percent. The USMCA also renegotiated their labor provisions for manufacturing companies, opened up Canada’s dairy market for exportation within the US, and extended the terms of copyright 70 more years beyond the life of the author, and, “it also extends the period that a pharmaceutical drug can be protected from generic competition, and includes new provisions to deal with the digital economy, such as prohibiting duties on things like music and e-books, and protections for internet companies so they’re not liable for content their users produce”.

Overall, there is debate whether NAFTA’s end results justified the current states of the three nations. Through extensive research and balance of the benefits to its consequences, NAFTA, unfortunately, created more dilemmas for all three countries and resulted in overpopulation in the US, illegal immigration within Canada and the US, and Mexico’s shortcomings of land and wages. In brief, NAFTA's controversial results ultimately worsened North America’s environment and inhabitance for the long run, while routinely increasing each nation’s revenue of imports and exports.

References

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