Pros And Cons Of Nafta

2. 1. EMPLOYMENT/JOBS
In reality, NAFTA did not cause the huge job losses feared by the critics or the large economic gains predicted by supporters. The unemployment actually decreased on both countries from 1994 onwards (exhibit 8). Obviously, it is not correct to say that NAFTA was the motive for that happening because there are other representative factors that influence employment rates.

USA
Given the size of the US economy and also the importance of other trading partners, we can easily access that the net effect of NAFTA on jobs in the United States has been small when compared to the other 2 countries which are relatively small and much more dependent of the US (Exhibit 9). Changes in employment due to trade are considered to be really …show more content…
Labour market will be in charge of adjusting the wages: rising them in the sectors that benefit from trade.
Nevertheless, economists argue that the surge of imports from the US caused the loss of up to 600.000 jobs over two decades. However, they also admit that some of this import growth would have happened with or without NAFTA. The main affected sector was obviously manufacturing which assisted to a reduction of 350.000 US jobs in the auto sector and an increase from 120.000 to 550.000 on Mexico’s auto sector.
Indeed, we cannot deny that a lot of jobs were lost due to the change of production to Mexico where it was cheaper to produce, especially in manufacturing sector. However, these job losses were offset by other jobs gained. It is certain that we must not ignore the impact on losers (political concern) but there were also several winners, for example the consumers that benefit from the falling prices and often improved quality of goods created by import …show more content…
It is clear that jobs created in export manufacturing were offset with jobs lost in agriculture due to imports.
Economic theories defend that opening to trade would increase the demand for labour in labour-abundant countries, such as Mexico, and therefore increase the number of jobs and wages. However, this was not what happened as we can see in exhibit x. One explanation for this might be related with the policies regarding tariffs: which ones were eliminated, by which order, etc.
NAFTA was responsible by a significant cut on tariffs mostly on manufactured goods, for example transportation equipment. As a result of these cuts, the pattern of change between them has changed a lot throughout the years: Mexico shifted from a net trade deficit with the US before NAFTA to a net surplus (even though the deficit in agricultural trade: exhibit 10)
To evaluate the employment in Mexico, two concepts must be clarified: maquiladoras (which are export assembly plants- auto parts, electronics and apparel sectors) and the medium-size and large manufacturing establishments. This happens because Mexico government distinguishes manufacturing employment into these two

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Nafta Pros And Cons