The North American Free Trade Agreement created the world's largest free trade area.

It
links 450 million people. Its member economies generate $20.8 trillion.It's also highly
controversial. Do the pros of NAFTA outweigh the cons?

Advantage

NAFTA has six advantages. First, it quadrupled trade between Canada, Mexico, and the
United States. That's because the agreement eliminated tariffs. Trade increased to $1.14
trillion in 2015.

Second, it lowered prices. The United States imports Mexican oil for less than before the
agreement. Thats because NAFTA got rid of tariffs. This decreases reliance on oil from
the Middle East. Food can also be transported for lower costs, reducing grocery
bills. Costs are lowered for farm products, too.

Third, economic output in the trade area grew. It boosted U.S. growth by as much as 0.5
percent a year. Three industries benefited the most from increased exports:
agriculture, automotive, and services such as health care and financial services.

Fourth, NAFTA created jobs. Increased exports led to nearly 5 million new U.S. jobs.
Furthermore, manufacturers created 800,000 jobs in the first four years of NAFTA.

Fifth, foreign investment more than tripled. U.S. businesses invested $452 billion in
Mexico and Canada. Companies in those two countries invested $240.2 billion in the
United States.

That helped manufacturing, insurance, and banking companies.

Sixth, NAFTA reduced government spending. That's because each nation's government
contracts became available to suppliers in all three member countries. That increased
competition and lowered costs.

Disadvantage

NAFTA also had six disadvantages.

First, it led to the loss of 500,000-750,000 U.S. jobs. Most were in the manufacturing
industry in California, New York, Michigan and Texas. Companies in some industries
moved to Mexico because labor was cheap. These industries were automotive, textile,
computer and electrical appliance.
Second, job migration suppressed wages. Sixty-five percent of companies in the affected
industries threatened to move to Mexico. The U.S. workers remaining in those industries
could not bargain for higher wages. Between 1993 and 1995, 50 percent of all companies
in the industries that were moving to Mexico used the threat of closing the factory. By
1999, that rate had grown to 65 percent.

Third, NAFTA put Mexican farmers out of business. It allowed government-subsidized

U.S. farm products into Mexico. Local farmers could not compete with the artificially
low prices.

Fourth, as Mexicans lost their farms, they went to work in sub-standard conditions in
the maquiladora program. Fifth, U.S. companies degraded the Mexican environment to
keep costs low.

Sixth, NAFTA allowed Mexican trucks access into the United States. Mexican trucks are
not held to the same safety standards as American trucks. Therefore, Congress prohibited
this provision.