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Description
This thesis analyzes the effects of the United States involvement in its first, and longest, multilateral free trade agreement with its two largest neighbor nations: The North American Free Trade Agreement. The research question which is explored and analyzed here is: How has the North American Free Trade Agreement affected the United States domestic industry and if the United States should involve itself in this type of agreement? With the United States shift from isolationist and protectionist practices it came to accept globalist economic policies, such as free trade. However, as the world's largest consumer the acceptance and implementation of these free trade policies has led to economic harm. This is shown through the historical data of trade between the countries involved in the North American Free Trade Agreement and it is found that there are significant harmful effects on the United State as a result of this agreement. Specifically, the United States heavy loss of domestic industry and loss of income. The United States involvement in the North American Free Trade Agreement is described and analyzed using the logic models of classical and neoclassical trade theories. It is found that these trade theories' inappropriate application could explain the United States involvement in the North American Free Trade Agreement. Finally, using the ideas of classical and neoclassical trade theories it is determined that the best option for the United States to rebuild its domestic industry is to participate in protectionist and isolationist policies.
Keywords: The North American Free Trade Agreement, NAFTA, Classical Trade Theory, Neoclassical Trade Theory, United States Domestic Industry, Domestic Industry, Consumer Nation, Producer Nation, Comparative Advantage, Supply and Demand, Trade Deficit, Protectionism, Globalism
Keywords: The North American Free Trade Agreement, NAFTA, Classical Trade Theory, Neoclassical Trade Theory, United States Domestic Industry, Domestic Industry, Consumer Nation, Producer Nation, Comparative Advantage, Supply and Demand, Trade Deficit, Protectionism, Globalism
ContributorsBenado Smasch, James Antanaychis (Co-author) / Benado Smasch, James A. (Co-author) / Oliver, Jerry (Thesis director) / Ron, Amit (Committee member) / School of Social and Behavioral Sciences (Contributor) / School of Public Affairs (Contributor, Contributor) / Barrett, The Honors College (Contributor)
Created2020-05
Description
The North American Free Trade Agreement was passed by the U.S. Congress in November 1993. The United States had decided that a regional trade approach would be more beneficial than bilateral trade with its neighbors. This move accepted Mexico as an equal economic partner with the United States and Canada despite their economic deficiencies. The NAFTA agreement came into effect on January 1, 1994. Canada, Mexico, and the United States agreed to eliminate tariffs on roughly ninety-nine percent of internationally traded goods by the end of 2004. The agreement was also significant because the three nations took a big step in further liberalizing Foreign Direct Investment policies. NAFTA resulted in what is today a $19 trillion regional market with over 470 million consumers. The U.S. Chamber of Commerce estimates that six million U.S. jobs depend on trade with Mexico and another eight million jobs depend on trade with Canada. As seen, economic interests clearly dominated the NAFTA debate on all fronts. There still were other domestic political interests that further pushed the United States to seek regional integration with Canada and Mexico. Drugs, energy, pollution, and the threat of American jobs as a result of Mexico’s low wages were all major issues considered in the United States at the time. The issues noted above can be closely linked to the United States’ national security interests. Policy-makers and treaty negotiators constantly connected the passage of this agreement to the long-term interests of the United States. For NAFTA to have a chance in the first place, all operational concerns had to have been resolved first. The governing structure for management of the activities that fall under NAFTA’s umbrella was a huge prerequisite. Additionally, separate side agreements with Canada and Mexico had to be negotiated so that the they would offset any future problems NAFTA might create for the United States. Although a challenge, it all came together perfectly and the passage was successfully implemented. Taking everything into consideration, the United States should stray way from its’ isolationist ways and pursue a regional agreement like NAFTA for the betterment of all North Americans.
ContributorsIvanov, Martin (Author) / Ackroyd, William (Thesis director) / Rivero, Tony (Committee member) / School of Social and Behavioral Sciences (Contributor) / Barrett, The Honors College (Contributor)
Created2019-05