North America Free Trade Agreement (NAFTA ) is a trade agreement that covers the North American region. It was implemented and signed in 1992 by the then ruling presidents of Mexico, the United States of America and Canada. This free trade area created by the agreement is said to be the largest the world in terms of GDP (About.com:US Economy 1). The intended goals for the creation of NAFTA by the three countries include the creation of a free and common market for the three countries in order to improve and promote trade. A free trade market was to be created by eliminated all taxes and tariffs on goods brought to the market area by the three countries. Its regulations were also aimed at providing intellectual property rights protection.
NAFTA was implemented to create conditions that promoted competition amongst the players from the three countries. This was aimed at improving the services of goods and services supplied to the market. Another goal was to create conditions and an environment that was favourable and attractive to investors (both local and foreign). This aimed at increasing investment opportunities in the three signatory countries which would increase employment opportunities for their populations (About.com:US Economy 1). NAFTA’s most important goal apart from creating a common and free market was to make the signatory members most favoured nations.
NAFTA’s sole goal was to improve the economic growth in the three countries through trade. Its frameworks also provide opportunities cooperation between the three countries on other regional matters that are not necessarily related to trade.
Sandra Polaskis Evaluation of these Goals in Terms of Job Generation in both Non-Maquillladora, Maquilladora and Agricultural Sectors from 1994-2006.
In her evaluation of the goals of NAFTA, Sandra Polaskis concentrated on how its creation has affected employment in the Non-Maquillladora, Maquilladora and Agricultural Sectors from 1994-2006. In evaluating the effect of NAFTA on employment in the manufacturing sector in Mexico, Polaskis (15), explains that during the early years after creation of NAFTA, employment opportunities increased in both Non-Maquillladora and Maquilladora sectors. The creation of the agreement which had attractive and favourable conditions attracted more people to invest hence generating more jobs. The expansion of the market which linked millions of people also required the manufacturers to increase their production in order to meet the demands. This forced them to employ more people in their plants so as to increase productivity (Polaskis 15).
However, this increase of productivity by manufacturing companies as a result of the creation of NAFTA led to stagnant employment rate. This is because increased productivity rarely calls for need for more employment. It can be said that job generation in both the two sectors decreased with time after the creation of NAFTA (Polaskis 16). NAFTA has also had a negative impact on job generation in the non – maquillladora sector. This goes especially for the small manufacturers and suppliers who have been replaced by foreign ones. There products have also been displaced by those imported from the other countries. The stiff competition has caused some of them to close down or reduce on the number of employees so as to maximize on profits.
These companies are not employing any more and their employees are earning lower wages which are characterised by lack of benefits (Polaskis 15) . NAFTA however led to increase in generation of jobs in the maquillladora sector. Maquillladoras which involves companies importing raw materials or spare parts, assembling and processing them and then getting them back to the market of their country of origin grew as a result of trade. NAFTA may not be the sole contributor to this growth but it greatly affected it as it phased out tax on the products manufactured by the maquillladoras (Polaskis 16). Growth of maquillladoras meant increase in employment and job opportunities as people were required to work in the created factories.
NAFTA has had a negative impact on the agricultural Sector in terms of job generation.(Polaskis 17). The introduction of foreign agricultural products in the market from the other countries especially corn from the United States which is sold at more subsidized prices than even what the local corn went for has negatively impacted the agricultural sector in Mexico. Most farmers have started to turn away from agriculture and are seeking employment from the other sectors. This is because their produce has no market and in the event they sell, they have to do it at very low prices which make them no profit as they incur higher costs of production than their counterpart farmers in the United States.
List of References
About.com:US Economy (2009). History of NAFTA. Retrieved 23rd April 2009. <http://www.about.com/>
Polaskis, Sandra (2004). Jobs, Wages, and Household Income. Retrieved 23rd April 2009.