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Debate: THBT NAFTA is justified

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This House believes that NAFTA is justified

Contents

Background and Context of Debate:

The North American Free Trade Agreement (NAFTA) came into effect on January 1, 1994 and removed trade barriers between Canada, US and Mexico. Signed by Democratic President Bill Clinton, the last part of the gradual phase out of tariffs took effect on January 1, 2008. Industries affected by NAFTA include, but are not limited to agriculture, textiles and automobiles. The policy also established regional labor and environmental standards, intellectual property protection and dispute-resolution mechanisms. NAFTA now accounts over a third of US trade and over 80 percent of Canadian and Mexican trade.

NAFTA has been an extremely controversial policy and sparked a wide range of responses. A former foreign minister of Mexico once called NAFTA "an agreement for the rich and powerful in the United States, Mexico, and Canada, an agreement effectively excluding ordinary people in all three societies,” and some critics argue that the policy should be interpreted as a long term campaign to countries social contract by business conservatives. Other argue that NAFTA has benefited the economies of the United States, Canada and Mexico and created necessary change in Mexico by breaking the grip of the PRI party in Mexico. [4][7][6]

Resolutional Analysis

As an economic policy, it is only fair to weigh whether or not NAFTA is justified in economic terms. Therefore, this page will focus on arguments surrounding the question of whether or not NAFTA has improved the economies of the US, Mexico, and Canada.

Definition of Justified: improved economic well being Value: Economic prosperity

Yes Team Line: NAFTA fueled economic growth in its member nations.

NO Team Line: NAFTA has devastated the economic well being of member states citizens.

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NAFTA Has Positively Effected the US Economy

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Yes

NAFTA has positively fueled growth in the US economy, as can be seen by looking at several key economic indicators. This growth justifies the policy because it has contributed to an increase in quality of life.

a.) NAFTA has boosted the economy through increased trade. According to the US Trade Representative 2008 NAFTA Fact Sheet, trade between NAFTA nations increased from 297 billion in 1993 to 930 billion in 2007. Since 1993 Business investment in the United States has increased 117%, a major increase compared to the 45% increase that took place between 1979 and 1993. This trade has been balanced and fair as illustrated by the agricultural exchange between the US and Mexico. US exports to Mexico have increased 5.7 billon and US agricultural imports from Mexico have increased 5.6 billion from 1994 to 2006.

b.) NAFTA has increased American’s manufacturing base. Between 1993 and 2006 the manufacturing output of the United States rose 58%, whereas between 1980 and 1993 it only rose 42%. Additionally, in 2007 manufacturing exports were valued at $982 billion, an all time high

c.) NAFTA Increased Employment. Between 1993 and 2007 unemployment increased from 110.8 to 137.6, 24%. Between 1980 and 1993 the average unemployment rate was 7.1, while under NAFTA during 1994 and 2007 it was only 5.1%. Additionally, compensation rates in manufacturing from an annual rate of 2.3% (1993 to 2005) from .4% (1987 to 1993).

d.) NAFTA has fueled GDP Growth. Under NAFTA the US has experienced a real GDP growth of 48%, while Mexico’s and Canada’s GDP has grown 40% and 49% respectively.

e.) NAFTA increased US economic productivity. Between 1993 and 2005 the US business sector’s productivity increased by 2.6% (total of 36.2%), which compared to the annual growth of 1.8% from 1981 and 1993 (total of 24.3%) illustrates significant growth.

f.) Investment has increased under NAFTA. Productive investment is a crucial cause of rising living standards and under NAFTA the US experienced a growth of 104% since 1993 (this excludes housing which which raise the figure even further). Between 1981 and 1993 the US’s productive investment only increased 37%. [1] [2].




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No

NAFTA cannot be considered a justified because it has stripped jobs from the United States, Hurt workers and failed to improve the global competiveness of the United States which is crucial to its long term economic health.

a.)NAFA stripped jobs from the US. As a result of NAFTA the United States had a large trade deficit with Canada and Mexico, which has resulted in the displacement of 879,290 US jobs. Most of these jobs were in high wage positions in the manufacturing industry.

b.) NAFTA Has Hurt Workers. The availability of cheep labor in Mexico with low manufacturing cost and environmental standards has suppressed wages in the United States, weakened workers bargaining power, their ability to create unions and reduced fringe benefits.

c.) NAFTA failed to improve the competitiveness of U.S'.' NAFTA had resulted in an increase of imports and slowing of exports which as contributed to a US trade deficit which is a primary indicator that NAFTA failed to improve US’s competitiveness as its supporters promised. [3][5][6]




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NAFTA Has Improved the Mexico Economy

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Yes

NAFTA has positively affected the Mexican economy as illustrated by its raising export rates, lower unemployment, increased trade and economic openness, which justifies it as a policy.

a.)NAFTA has increased Mexico’s Exports. Although Mexico has a trade deficient with the world, its exports to the United States are growing and boosting the economy. The manufacturing industry has experienced an especially high level of growth. Between 1995 and 1999 manufacturing exports increased 16%.

b.)NAFTA has increased jobs in Mexico. Official unemployment rates are lower then before NAFTA, which has also helped boost the economy. An average of 1.3 million more people a year are employed.

c.)NAFTA has increased trade. Since 1993 Mexico’s trade has increased from $81billion to $232 billion.

d.)NAFTA has opened up Mexico’s Economy. The policy has facilitated Mexico’s rapid political and economic transformation and opened up Mexico’s centrally directed closed economy. This transformation has (as shown above) benefited the economy. [4][3]




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No

Any attempts to show that NAFTA has improved Mexico’s economy are a misrepresentation of facts and understanding of the social situation in the country. Much of the economic “boost” in Mexico comes from factories along the border that assemble products cheaply and ship them to other countries to be sold. These are called maquiladoras and offer jobs with no security, no benefits, low wages and no future of advancement. The salary of salaried workers fell 25% after the implementation of NAFTA. The agricultural industry sector was devastated with the price of corn (which along with coffee is the main business of 20 million Mexicans) fell 50% after NAFTA was implemented. NAFTA also caused the saleries of small business owners and self-employed workers to drop by 40%. [3][6]





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NAFTA has Improved the Canadian Economy

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Yes

In relation to the Canadian economy NAFTA can be justified. Since 1994 Canada’s GDP has grown faster than Mexico and the United Sates. Its economy showed and average growth rate of 3.6% between 1994 and 2003, which is higher then the 3.3 % experienced by the US and the 2.7 felt in Mexico. Canadian’s export industry has done especially well, increasing form 25% of the GDP to 40%. In the early 2000s, Canadians employment increased from 14.9 to 15.7 million jobs. NAFTA has also positively affected big business in Canada and a study of members of the Canadian Council of Executives stated that from 1988 to 2002 their combined revenues increased 105%. [3][5][6][7]





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No

NAFTA has had a detrimental effect on the Canadian economy and can not be considered justified. The growth of the average income has fallen and is comparable to wages during WWII. At the same time income inequality has grown in Canada for the first time since the 1920s. The richest Canadian citizens have experienced massive gains while the rest of the population have experienced unemployment and watched unions become undermined. In the first four years of NAFTA Canada’s manufacturing industry lost close to 400,000 jobs. The Canadian Council of Chief Executives stated in a study that from1988 to 2002 their workforce shrank by 15%. These changes have lead to the erosion of the Canadian social sate and made Canada economically dependent upon the United States. [3][5][6][7]




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