Why is NAFTA bad?

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Why is NAFTA bad?

North American Free Trade Agreement led to loss of many jobs in some of the sectors. Due to NAFTA treaty among the countries US, Canada and Mexico, the jobs are lost in the US. Organized labor, politicians and environmental groups are against the NAFTA policy. The trading done globally transfers the newly created jobs out of the US and into those countries which can withstand lower wages. In the United States, the labor is costlier than in the third world countries.

Companies which do not understand that the low end labor can be easily obtained from third world countries cannot be in the business for long. According to the business principles of the companies, recently there are two things that have to be followed. It is necessary to transfer jobs to the places where low wages are accepted or to search for ways to automate. Whatever may be the case, the new jobs are gone out of the United States. NAFTA is actually bad for US and not for those countries which are hosting the trade relationship.

Tariffs were imposed on the imported goods in US earlier. About 100 years ago, there was lot of immigration to US from other nations as the companies moved to US. Hence United States was a very powerful industrial nation in 1880s. Due to collection of tariffs for a long time of about 100 years, the US became a creditor nation in 1914. This has made the country to vanish the slavery as it has become prosperous. The tariffs were ended in 1913. Income tax was levied instead of tariffs. United States started to export and the exporting should not have tariffs. Unfortunately, US lost trade balance by 1980. Again US had become debtor nation by 1988.

Due to rejection on tariffs, the US economy is now out of control. The deficit in the trading that US faces is almost equal to that of its total exports. The amount invested on exports created debt in the US account balance. The economy is under crisis. Hence, NAFTA is bad.

Author: Hari M

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