North American Free Trade Agreement Essay Example

the implementation of protectionism measures.

While imports from Mexico have decreased, protective measures have also been put in place for Mexican-imported goods that are considered important to their economy. Moreover, it argues that fair competition is not fostered by NAFTA due to agricultural subsidies in the US that remain intact. These subsidies make it difficult for Mexican farmers to compete against heavily subsidized American crops. This disparity leads to differences in subsidies, infrastructure, and environmental protection measures between both countries.

Stiglitz's book "Fair Trade For All" discusses the impact on labor due to NAFTA as well as unfulfilled promises made by the US to Mexico. Despite agreeing to remove barriers for various sectors under NAFTA, agricultural subsidies were still maintained while tariffs on non-major exports from Mexico were mostly reduced.

To gain a better understanding of the impact of NAFTA on employment, we can analyze the decrease in export duties from Mexico to the US and the reduction in import duties on goods from the US.
The rise in exports from Mexico provides job opportunities, while an increase in imports results in job losses. Since the implementation of NAFTA, trade between Mexico and the US has undergone changes due to tariff reductions. Mexico has lowered trade barriers on US exports, especially agricultural and manufactured goods, and eliminated protectionist rules and regulations. On the other hand, the US has made minimal reductions in industries crucial for Mexico's exports and continues to practice protectionism through agricultural subsidies.

After NAFTA was enacted in 1994, Mexico faced trade deficits with the US in agriculture, except during the peso crisis of 1995 when a temporary trade surplus occurred due to increased costs of U.S. products

for Mexican consumers caused by peso devaluation. According to Sandra Polaski, director of "Carnegie Endowment for International Peace," stable peso led to trade deficits and job losses in the agriculture sector.

Employment in agriculture increased from late 1980s until 1993, reaching 8.1 million jobs; however, it consistently declined after NAFTA was implemented. By 2004, employment had dropped to 6.8 million with a decrease in workers engaged in agricultural activities from 26.8% (in 1991) to 16.4% (by 2004). Corn producers were particularly affected by NAFTA as they estimated a loss of around 1.013 million jobs.
Many corn producers migrated to urban areas near the US-Mexico border in search of job opportunities within maquiladoras. This migration caused a significant imbalance in Mexico's labor force. The differences in agricultural duty reductions and subsidies between Mexico and the US further contributed to job losses for Mexican farmers. Moreover, US farms are about four times larger than those in Mexico and generate three times more revenue, resulting in the US producing approximately eleven times more maize than Mexico does. Despite antidumping regulations and offsetting laws imposed by NAFTA, the United States continues to export its surplus maize production into Mexico while benefiting from advantageous agricultural subsidies. In fact, the United States receives around three times more farm subsidies per hectare than Mexico does, creating imbalances that allow for dumping practices under NAFTA. As a consequence, employment rates within Mexico's agricultural sector have declined. Labor distortions can also be observed within the manufacturing sector under NAFTA, particularly within maquiladora and non-maquiladora fabrication categories. Between January 1994 and May 2003, employment decreased from 1.4 million to 1.3 million in the non-maquiladora sector. Maquiladoras, which

are owned by US manufacturers and were established in 1965, led to the creation of approximately 800,000 jobs from 1994 to 2001.
The number of currently employed maquiladora workers has declined by 250,000. Despite job creation decreasing since NAFTA, export levels in the fabrication sector seem to be increasing. According to the U.S. International Trade Commission (USITC), Mexico's export growth can be attributed partially to NAFTA but was primarily influenced by the devaluation of the peso in 1994. The devaluation had a greater impact on Mexican exports of manufactured goods to America than all duty cuts associated with NAFTA. Furthermore, employment in Mexico's manufacturing sector decreases as exports increase due to adopting the maquiladora model. Around 97% of component parts are imported from the US, while only 3% are domestically produced. Once finished products are done, they are re-exported back to the US. The non-maquiladora sector shows similar effects as many manufacturing companies heavily rely on imports from the US, which deepens their dependence on the country. Unemployment rates have also risen significantly in Mexico's agricultural sector due to NAFTA's effects.Despite the job creation in low-wage positions without benefits or future security within the manufacturing sector thanks to NAFTA, continuous immigration growth to the US serves as evidence of its failure to improve employment conditions in Mexico. The accessibility of increased American investment in China, where wages are even lower than those offered in Mexico-owned factories favored by American manufacturers, is another factor contributing to decreased employment opportunities within Mexico's manufacturing industry. Approximately 30% of manufacturing jobs created by NAFTA have been relocated to China, resulting in a mixed impact on employment. While there were gains

in fabrication, there were also losses in agribusiness and improved access to China for the US. These negative effects extended beyond labor to the environment, specifically affecting Mexico's maquiladoras and agribusiness sectors. The Pollution Haven theory and the existing imbalance in environmental protection among NAFTA partners influenced these effects. Despite initial expectations of being environmentally friendly, NAFTA ultimately failed to protect Mexico's environment adequately. Concerns about pollution-intensive industries relocating from the US and Canada to Mexico due to weaker environmental regulations were raised based on Wise's (2004) theory. Additionally, the existing disparity in environmental protection between the US and Mexico contributed to the adverse impact on Mexico's environment.In 1992, a study conducted by IPAC emphasized the need for comparable environmental regulations and enforcement among all three countries involved in free trade. Mexico has faced significant environmental disadvantages compared to the US since NAFTA. Sectors such as maquiladoras and agriculture have been particularly affected. Jennifer Clapp, a professor at the University of Waterloo, explores these issues in her book "Toxic Exports: The Transportation of Hazardous Wastes from Rich to Poor Countries." In her article titled "Piles of toxins," she discusses how the theory of pollution oasis explains the initial negative impacts on the environment. She also highlights that hazardous waste imports into Mexico have doubled since 1994, mainly originating from the US. According to a report by Texas Center for Policy Studies, waste flow from the US to Mexico increased from 143,800 tons in 1995 to 230,865 tons in 1999. These imports primarily consist of electric discharge furnace dust (EAD), lead acid-batteries, containers for hazardous waste, and collectors. Clapp argues that there is a strong correlation

between the increase in hazardous waste in Mexico and the rise of maquiladora plants under NAFTA. Between 1990 and 1999 alone, the number of such factories grew from 1704 to 3297 with approximately 60% generating substantial amounts of toxic waste.The presence of maquiladoras in Mexico has resulted in increased levels of toxic waste production. Approximately 20% of Mexico's toxic waste can be attributed to these factories, contributing to environmental degradation due to inadequate management. Government statistics reveal that only 12% of hazardous waste in the country is handled correctly. NAFTA, through the La Paz Agreement and Mexico's General Law for Ecological Equilibrium and Environmental Protection, aims to address the generation of risky wastes by foreign-owned companies, particularly those operating maquiladoras. These agreements stipulate that such wastes should be disposed of within the country where raw materials were produced. However, due to insufficient environmental protection infrastructure in Mexico, about 30% of maquiladoras end up returning their toxic waste to the US instead. Excessive pesticide use in agriculture also poses environmental problems as these toxins contaminate land and water sources, leading to habitat pollution and polluted drinking water. Furthermore, these pesticides can have severe health effects on humans and cause birth defects while also negatively impacting animal species that consume contaminated food and water supplies. According to INEGI statistics, environmental degradation has outweighed the benefits of trade-driven economic growth in Mexico. Kevin Gallagher from Boston University argues that significant environmental concerns have worsened since trade liberalization was implemented in the country.According to data from INEGI, there has been a significant increase in various environmental issues in Mexico. Soil erosion has increased by 89%, municipal solid waste by

108%, water pollution by 29%, and urban air pollution by 97%. These figures not only indicate a worsening impact on the environment but also potential consequences for the country's overall development.

Additionally, Gallagher estimates that the financial costs associated with this environmental degradation amount to approximately $36 billion per year, which is equivalent to 10% of Mexico's GDP. This substantial damage far exceeds the value of economic growth, which stands at an annual rate of only 2.5% or $14 billion per year based on Gallagher's research in 2004.

The reduction in environmental protection plans in Mexico has had negative consequences as it highlights the significant disparity between economic growth and the expenses incurred due to environmental devastation. This decrease was brought about by budget shortages and cuts in spending on environmental protection due to NAFTA.

Furthermore, the study reveals that agricultural subsidies have not been regulated by NAFTA, resulting in job losses in agriculture and the creation of insecure jobs in manufacturing sectors. The implementation of NAFTA has had detrimental effects on employment and the environment in Mexico, including the destruction of its major export sector, agriculture, to make way for heavily subsidized crops from the US.The lack of proper environmental protection infrastructure in Mexico has resulted in the cost of degradation being greater than its economic growth. Therefore, NAFTA has been more harmful than beneficial for Mexico. To address this issue, it is necessary to reevaluate and improve various aspects of NAFTA. The governments of Mexico, the United States, and Canada should take actions to mitigate the negative impacts on employment in Mexico's agricultural and manufacturing sectors while implementing environmental measures for a cleaner environment in Mexico.

Recommendations include eliminating US farming subsidies completely, providing increased protection for small farmers in Mexico, and improving the education level of Mexican citizens (Polaski, 2004). Steps needed to enhance environmental protection involve reassessing NAFTA's requirements for establishing and maintaining environmental standards, reopening discussions on environmental impact, and enhancing monitoring and reporting processes for hazardous waste creation, transportation, and disposal (Clapp, 2002; ).According to Gallagher (2004), there are various additional sources on the topic including Stiglitz's book "Fair Trade for All" (2005), Wise's articles on "The Environmental Costs of Agricultural Trade Liberalization: Mexico-U.S. Maize Trade Under NAFTA" (2004) and "The Paradox of Agricultural Subsidies: Measurement Dumping, and Policy Reform" (2004). Another relevant book is "NAFTA: Issues, Industry, Sector Profiles and Bibliography" by B. Zangari in 1994, published by Nova Science Publishers, Inc. in Commack, New York. The Global Development and Environment Institute is located in Medford, Mass.