Naft Cons Of Free Trade - 1592 Words

CUSFTA NAFTA: Cons of Free Trade Canadian History CHC2D6-05 Siyan Liu The CUSFTA (Canada - U.S.A. Free Trade Agreement) was established in 1987, officially implemented starting 1988. A few years later it was replaced by the NAFTA (North American Free Trade Agreement) in 1994, which is essentially the same as its predecessor but with Mexico added in. These trade agreements established and modified rules of international trade among the countries of Canada, the United States of America, and Mexico (Krugman Germic, 2008). Free trade has indeed brought some benefits to the countries involved, greatly raising the amount of trade among all three countries in the years since it’s establishment. However those benefits are†¦show more content†¦While free trade could potentially mean a lot of benefits, its superiority over protectionism is strictly theoretical, under the conditions that you disregard all the unique conditions of each country involved, and the possibility of exploitation of workers, resources and legal loopholes by large corporat ions. Realistically industries will be monopolized by whichever country that does it cheapest, thus making any competition in that industry from the other countries extremely unprofitable and unsustainable. Each country would only be able to focus on sectors that they have a comparative advantage in, while the other industries would stagnate, laying off masses of workers, causing high unemployment rates in the country. Furthermore, businesses are focused on their own profit so they’ll go for labour wherever it’s cheapest, which increases income disparity. Theoretically, free trade can bring about the largest amount of trade and aggregate wealth for everyone by making each country specialize in what it has an advantage in, to produce more for less, lowering the market prices to be more affordable, greatly boosting trade, and raising quality of life. Essentially free trade aims to maximize income for each country under the contemporary conditions. However even if everyth ing miraculously goes as planned and that hypothetical situation is reached, even under these perfect conditions free trade will allow no further development of industry.