Summary: Negative Effects Of NAFTA

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Negative Effects of NAFTA in the U.S.

While NAFTA shows many benefits on a national level, it has a negative impact on wages and unemployment rates. Unskilled workers in California, New York, Michigan, and Texas were specially affected as companies moved to Mexico due to cheaper labor (Amadeo, 2017). It is estimated that between 500,000 and 750,000 U.S. jobs were lost in the automotive, textile, computer, and electrical appliance industries [See Apendixes 1 and 2] (Amadeo, 2017). Furthermore, wages of the remainder workers in these industries were suppressed as companies threatened to move operations to Mexico if employees demanded higher wages (Amadeo, 2017).
Studies done by Kate Bronfenbrenner at Cornell University showed the effects of
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Unfortunately, a beneficial renegotiation seems unlikely under the Trump administration, which has insulted Mexican immigrants and demanded that Mexico pay for the wall. The reality is that no renegotiation of the NAFTA can achieve this administration’s main goal, which is to bring factory jobs back to the U.S. and reduce the merchandise trade deficit with Mexico (“The pitfalls of renegotiating NAFTA, 2017).
On the other hand, Eugene Beaulieu, economics professor at the University of Calgary, argues that NAFTA should not be renegotiated. Beaulieu claims that while NAFTA did cause the loss of jobs in some industries, it created jobs in other industries. More importantly, NAFTA did not increase U.S. unemployment in the long run, but it did increase productivity (Beaulieu, 2017). He concludes that renegotiating the agreement would be a very long process that would cause great uncertainly in all countries involved, and create the risk of having one of the countries walk away all together (Beaulieu, 2017).

Withdraw from
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Unfortunately, NAFTA’s Article 2205 allows any party to withdraw from the agreement within six months of providing written notice (Luhby, 2016). The actual effect of withdrawing from NAFTA is ambiguous as the U.S. has not withdrawn from a trade agreement since 1886 (Luhby, 2016). However, one of the possible outcomes from pulling out of NAFTA is a trade war with Mexico and Canada (Luhby, 2016), which would be very damaging to the U.S. economy considering export to Mexico and Canada account for one-third of total U.S.

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