The North American Free Trade Agreement, or NAFTA, was a trilateral agreement established in 1994 to encourage commerce between the United States, Mexico, and Canada (Kehoe). The primary objective of NAFTA was to increase trade among the North American countries through the reduction of tariffs and other trade barriers (Kehoe). The secondary goals of NAFTA included the establishment of mechanisms to settle trade disputes, safeguard intellectual properties, and enforce environmental and labor regulations (Kehoe). The legislation of NAFTA made the North American markets more accessible to the countries involved. Commerce did indeed increase, and the North American countries experienced growth as a direct result of the free trade agreement (Krugman).
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Krugman agreed that there would be minor negative repercussions to specific sectors in the United States, but NAFTA would overall be a gain to the countries involved (Krugman). Most of the negative discussion about NAFTA pertained to only the United States and Mexico. Why was Canada not involved? Canada was not as entangled in the debate because many Americans perceived free trade with Canada as successful, which it was. On the other hand, Americans viewed the situation between Mexico and the United States in a different light because the gains were meager and unproportionate. There is a misconception that free trade is fair, but free trade and fair trade are completely different subjects. The goal of free trade agreements like NAFTA is to promote economic growth by removing trade barriers, whereas the goal of fair trade agreements is to prevent the marginalization of weaker producers like farmers and small businesses. Thus, situations like the unsubsidized farmers in Mexico being unable to compete with the subsidized farmers in the United States can emerge as a result of unrestricted trade (Stiglitz & Charlton). Free trade is intrinsically unfair as long as there are discrepancies between the countries involved. Two countries can gain from free trade even when their absolute advantages are disproportionate by exploiting their comparative advantages (Lecture). Thus, countries will overall benefit from unrestricted trade in spite of the minor losses that may incur during specialization
Krugman agreed that there would be minor negative repercussions to specific sectors in the United States, but NAFTA would overall be a gain to the countries involved (Krugman). Most of the negative discussion about NAFTA pertained to only the United States and Mexico. Why was Canada not involved? Canada was not as entangled in the debate because many Americans perceived free trade with Canada as successful, which it was. On the other hand, Americans viewed the situation between Mexico and the United States in a different light because the gains were meager and unproportionate. There is a misconception that free trade is fair, but free trade and fair trade are completely different subjects. The goal of free trade agreements like NAFTA is to promote economic growth by removing trade barriers, whereas the goal of fair trade agreements is to prevent the marginalization of weaker producers like farmers and small businesses. Thus, situations like the unsubsidized farmers in Mexico being unable to compete with the subsidized farmers in the United States can emerge as a result of unrestricted trade (Stiglitz & Charlton). Free trade is intrinsically unfair as long as there are discrepancies between the countries involved. Two countries can gain from free trade even when their absolute advantages are disproportionate by exploiting their comparative advantages (Lecture). Thus, countries will overall benefit from unrestricted trade in spite of the minor losses that may incur during specialization