NAFTA is a free trade organization, which focuses on the development of the free trade in North America between member states. In fact, member states agree on the development of free trade to stimulate their economic development because NAFTA opens markets of member states for each other. At the same time, the development of free trade in terms of NAFTA raises a number of issues, which put under a question the reasonability of the further development of NAFTA.
On analyzing the development of NAFTA, it is important to place emphasis on the fact that NAFTA was created to promote free trade between member states, namely the US, Canada and Mexico. In fact, NAFTA eliminated fiscal barriers between countries that signed the agreement and stimulated their economic cooperation. The creation of NAFTA was a logical step in response to the growing cooperation between member states because existing fiscal barriers and regulations prevented companies operating in the US, Canada and Mexico from free trade in each other’s market. As a result, the creation of NAFTA opened the way for the free trade and companies could develop their business on the territory of member states without any substantial obstacles from the part of local governments.
At the same time, the development of NAFTA raised the question concerning the extent to which the agreement was beneficial for member states. In fact, the main question was the question of who benefits the most from NAFTA. Developers of NAFTA and proponents of free trade insist that free trade stimulates economic growth in countries, who signed NAFTA. The trade between the US, Canada and Mexico increased substantially. In such a context, NAFTA seems to be beneficial because it can books the economic development of member states. The economy growth, in its turn, creates new jobs and businesses that improve the socioeconomic situation in each country, member of NAFTA.
However, benefits of NAFTA are not so significant compared to risks and threats associated with the development of NAFTA and consequences of the emergence of free trade between the US, Canada and Mexico (Weiler, 2002). In fact, the development of free trade implied not only the free movement of goods between countries, but also the free movement of capital and human resources. In such a way, the development of free trade stimulated the further integration of countries. However, such integration raised a number of problems. For instance, the US faced the problem of the growing immigration from Mexico and such immigration was the natural consequence of the elimination of barriers between countries.
At the same time, Mexico faced the problem of the replacement of national companies by strong American and Canadian corporations. Local companies have proved to be unable to compete with large multinational corporations and stronger companies from the US and Canada. Canada also faced substantial difficulties associated with the expansion of American companies.
As a result, the development of free trade in terms of NAFTA is beneficial for national economies only in a short-run perspective, whereas, in a long-run perspective, the free trade is beneficial for large multinational corporations, which use free trade to maximize their profits. In fact, free trades stimulates outsourcing, when large corporations move their production from the US or Canada to Mexico, while local companies turn out to be unable to resist to the expansion of large multinational corporations and stronger rivals from other member states.