Has America benefited from NAFTA
NAFTA - at a glance
What are the advantages of NAFTA?
The single market consists of 478 million people and they all benefit to a greater or lesser extent from the free trade agreement. For the USA, Canada and Mexico are the biggest export destinations - even ahead of China - especially for goods and services. Mexico and Canada, in turn, export the most to the USA. Almost 60 percent of the goods imported into the United States are supplier parts, mostly parts for car factories. Auto exports from Mexico to the USA even amount to 80 percent. If NAFTA didn't exist, the Americans would have to be prepared to spend significantly more money on vehicle purchases. From 1994 to 2016, US exports to Mexico increased six-fold, and Mexican exports to the US even seven-fold. Overall, the domestic market has an economic output of 17 trillion US dollars.
What is criticized about NAFTA, especially from Donald Trump?
Like any other free trade agreement, NAFTA should ensure growth and prosperity. At first glance, it succeeded. At second glance, however, there are also numerous points of criticism. US President Donald Trump, for example, criticizes the fact that the foreign trade deficit, especially with Mexico, is too large. That's because the US imports more from Mexico than it exports. The USA is partly to blame for this, as many US companies have relocated their headquarters to Mexico. The working conditions there are a lot cheaper, for example the hourly wages for employees are significantly lower. In short: US industrial jobs have migrated - economic experts assume 600,000 jobs will be lost - and the trade deficit has now grown to over 60 billion dollars. Trump is, of course, anything but "amused" about this. However, Mexico benefits from this, especially through the US auto industry, which has partially relocated its production to Mexico. This is said to have created a total of 300,000 jobs. However, those who do not profit are the Mexican smallholders, who are suffering from the invasion of US corn and can hardly withstand the competition. Canada was smarter than that. The country protects its farmers with import restrictions for agricultural products from the USA or Mexico.
What should be reformed?
Canada and Mexico recently announced that they would like to introduce energy policy requests and set up further rules for electronic trading. Online trading is to be made easier by higher duty-free amounts. Canada sees the danger that Canadians will order more online from the USA in the future, which could have a negative impact on Canadian retailers.
For its part, the US wants to reduce the trade deficit with Mexico, and US products, including food and agricultural products, should have better access to the markets in both neighboring countries. Furthermore, Donald Trump wants to tighten labor law, especially in Mexico, so that US companies do not continue to outsource their production to the neighboring country.
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