Trade agreements play a massive role in macroeconomics. These are agreements between two or more countries to effectively trade goods. To understand the whole idea of trade agreements and how they work, a few other concepts must be introduced. The North American Free Trade Agreement, known collectively as NAFTA, includes Mexico, Canada, and The United States. NAFTA was created by the George H.W. Bush administration in 1992, but passed through Congress during the Clinton administration in 1994 (Brown, washingtonpost.com). Working alongside NAFTA, is the concept of globalization. This is the “Extension, acceleration, and intensification of worldwide interconnections” (Sparke 3). Sparke includes an example of these interconnections as someone reading a book (something that occurs here) and the logging being done to produce the book (something that occurs there) (3). It should also be noted that globalization has become a buzzword that relates to the growth of global interdependency (Sparke 5). How can trade agreements and embargos impact sustained growth in the countries involved in the agreement compared to countries outside of the agreement, and how can changing these agreements positively affect the individual worker and small business?

Generally speaking, the attitude of Americans towards Globalization is nonchalant. Anderson asserts that, “Students [do] fully recognize the significance of an integrated North America for each of the three economies, but are only vaguely aware of what NAFTA is (or is not), and do not seem troubled by the potential impact an evolving web of security measures may be having” (450). He theorizes that this apathy is a result of the way we as a society consume information now (Anderson 450). Sparke implies that support for NAFTA is dwindling after stating that, “54% of Republican voters thought that trade agreements like NAFTA and the policies of the WTO were “bad for the US” (compared with only 35% of Democrat voters) ... it is not hard to understand why rural conservatives in these regions are tending towards anti-free trade positions, too” (399). This sentiment is also shared today by many conservative voters. The Trump administration has been working to change or withdraw from NAFTA and trade relations with Canada and Mexico since his election in 2016 (Brown, washingtonpost.com).

In the United States, globalization has caused a rift in the working class. Immigration from Central and South American countries have been used as a scapegoat for the replacement of workers. Many people also blame the outsourcing of jobs to countries like China, Mexico, or Vietnam for job loss (“The real reason manufacturing jobs are disappearing”, Augie Picado, ted.com). However, Picado suggests that these jobs are switching to machine only, negating the use of human labor entirely, and that jobs lost across the United States usually are not a one-for-one deal overseas. He also dispels the myth that jobs are being outsourced by stating that job loss is inevitable with the growing mechanization of labor and is not due to conditions in Mexico (“The real reason manufacturing jobs are disappearing”, Augie Picado, ted.com). Outsourcing could be defined for use in this context as, “Sourcing components, sub-components, services …. from external suppliers”, this would include labor (Sparke 458).  

Foreign policy legislation is also impacted by NAFTA. Anderson argues that the attention that NAFTA draws distracts from the smaller, more important, interconnections between governments in a post 9/11 world, by stating that, “frustration over the institutional weakness of North American governance had been building well before 9/11 permanently welded security and economics together. This article argues that many of us, even those of us who speak and write about small steps forward, have become trapped into thinking of NAFTA as an idealized model for managing a growing list of bilateral and trilateral problems issues in North America” (451). He suggests that analysts draw away from using NAFTA as a template for future relations because it distracts from the connections and processes that are taking place across the borders every day (457).

Not far from home, NAFTA has impacted Mexico greatly. Obesity rates have skyrocketed into a full-fledged epidemic since the introduction of the corporate giants McDonald’s and Coca-Cola (Siegel, 209). Siegel concludes that, “Put simply, as global food systems change, an increasing number of individuals and entire populations are consuming unhealthy “Western diets,” which include an increased amount of animal products, vegetable oils, sweeteners, and processed foods” (201). This diet is also commonly critiqued in America. Mexico’s food imports have also increased by over $22 billion since the implementation of NAFTA (Siegel, 202). Partlow and Agren discuss the lifestyle changes that NAFTA has introduced to Mexico. These changes include things such as designer goods, movie theaters, and even the NFL, which were not as big a part of Mexican culture as they have become since the introduction of the North American Free Trade Agreement. They claim that, “The revolution in shopping options have become so ingrained that many Mexicans recall with haziness the pre-NAFTA days of limited brand choices, domestic knockoffs and black-market scrounging” (washingtonpost.com). This phenomenon of change is what they have coined “Americanizing”.

Overseas, the costs of globalization and NAFTA have been tremendous. Sparke cites sweatshops in China and cheap manufacturing in Mexico as examples of “class polarization” (15). He defines class polarization as the division of labor based on social status such as “garden work, fast-food work, and cleaning work” (15) as well as stereotypes like, “Asians have nimble fingers” (15) as the attitude towards foreign laborers in ‘richer’ countries, such as America. This leads to “stereotypical” jobs, an example being Asians only being able to find work in nail salons. The American hatred of outsourcing has been caused by changing technology making labor cheaper in some areas than others, such as the “Global South” (Sparke, 17). This also ties into Picado’s idea of mechanization (“The real reason manufacturing jobs are disappearing”, Augie Picado, ted.com). Sparke states that the cheap labor comes at a cost to the worker, as he points out that, “Ma Xianquian… whose body was found in front of his high-rise dormitory, had pay stubs showing that he had worked over 286 hours in the month before he jumped to his death” and that Chinese workers are “over tasked” (103).  Sparke also pushes the idea of employees being overworked further by citing a citizen from the Philippines who stated, “The is no point to a globalization that reduces the price of a child’s shoes, but costs the father his job [or life]” (105).

Recalling Ma Xianquian’s story, Sparke calls on the idea of downward harmonization, defining it as relentless downward pressures on wages, as well as worker benefits and protections. This is done on a global scale and effectively gets rid of pensions and worker’s benefits like insurance. Downward harmonization occurs when a business moves its assembly and research work to China, or call-center to India for less regulations and cheaper pay. While this idea is beneficial for the business, it is obvious what happens to their employees. This not only creates sourcing efficiencies for the business, but also creates systemic downward pressures on non-managerial wages and worker benefits globally. Downward harmonization also harms innocent “bystanders”, like the town that the business moves to. While this transplant will provide jobs and money, that does not mean it is done in an ethical way (Sparke 103). In other words, globalization and NAFTA have not only had worldwide consequences, but they have also led to racist and potentially demeaning stereotypes against other cultures. An example being the trope of Indian people working only at gas stations or tech support. 

While globalization has the potential to be unethical, when being compared to Latin American countries’ economies, NAFTA’s economies stand relatively strong. Meric et al. describe the differences between Latin America’s economies and NAFTA’s. To measure growth or decline in nations, the measurement of gross domestic product is typically used. Gross domestic product (GDP) is calculated by summing all of the finished goods and services produced in a nation within the year. For example, the United States would not count lumber in their GDP but would count a finished treehouse in someone’s backyard. Another example would be that China would not count cars made in the United States but brought into China, they would only count cars that had been manufactured in China. That being said, Meric et al. state that, “The U.S. had the highest annual GDP per capita among the NAFTA countries at $54,800 (19th highest in the world) and Mexico had the lowest at $17,900 (92nd highest). Among the Latin American countries, Chile had the highest GDP per capita at $23,200 (76th highest in the world) and Peru had the smallest at $12,000 (119th highest) … All three NAFTA countries were relatively close in annual GDP real growth rate at approximately +2.4%. They were also relatively close in world rank (ranging between 131st and 137th highest). Among the Latin American countries, Columbia had the highest GDP growth rate at 5.0% (54th highest in the world) and Venezuela had the lowest at -3.0% (213th highest)” (Meric et al. 23).  That being said, having a steady GDP growth is ideal, when compared to rapid spikes and deflations.    

Meric et al. argue that Latin America does however have much better turnover in regard to inventory by providing that “The univariate F value statistic indicates that inventory turnover is significantly higher in Latin American manufacturing firms than in NAFTA manufacturing firms at the 1-percent level” (27). This means that Latin America based manufacturing firms are more efficient in managing their inventories when they are compared to NAFTA manufacturing firms. This result could also imply that NAFTA manufacturing firms tend to carry significantly higher levels of inventories compared to Latin American manufacturing firms and that is why NAFTA manufacturing firms have a much lower turnover when compared to Latin America based manufacturing firms (27). On page 28, they do state that “Net profit margin is not significantly different in NAFTA and Latin American manufacturing firms” (Meric et al.).

There are alternatives to NAFTA that are also involved in the global economy. An example being the World Trade Organization, or WTO. The WTO was also founded in 1994 (Sparke 470). The goal of the world trade organization is to organize global agreements by enforcing free-trade and regulating health and environmental protections, similar to how the Food and Drug Administration works in The United States. There are many regulations on medicine, and it is highly privatized. Generic drug brands, like over the counter, are not available to the public. Water and health services themselves are also privatized, this idea is also implemented in The United States. The World Trade Organization is not without faults, as it has been heavily criticized by keeping poorer countries from being able to “reach the upper crust”, and that it removes the path to wealth and economic security (Sparke 470).

In terms of support for the North American Free Trade Agreement, Uslaner argues that the public’s change in stance on NAFTA is not a reactionary change in opinion, such as one due to a change in the presidency. However, it is a sign of true support since the change in public opinion had taken nearly four years after NAFTA had officially been implemented by the Clinton administration. Uslaner insinuates that the sharp increase in support for the North American Free Trade Agreement (NAFTA) is not caused by a large shift in public opinion following major events. His argument is based on the September to November NBC News/Wall Street Journal surveys. He argues that instead, the increase in support for the pact reflected a slower response to a public debate over the merits of free trade versus protectionism (341). Uslaner insists that “…The increase in support for the pact seemed to reflect a slower response to a public debate over the merits of free trade versus protectionism. As the debate proceeded, large segments of the public—including the least interested—developed more highly constrained belief systems” (342). He invokes a “rational public”, stating that “Part of the reason for the increase in constraint comes from shifts in public opinion. For three of the four arguments, the public became more favorable to pro-NAFTA arguments… The NAFTA campaign involved a massive advertising campaign more typical of a presidential election than a public debate. When elites put a lot of effort—and money—into a crusade for public opinion, we may witness a major shift in attitudes that makes the public fit the model of reasoning citizens” (Uslaner, 354, 357). This means that the public, who are voters, did not just wake up one day and decide that they finally start supporting NAFTA. This was a slow realization and took time, it was not a knee-jerk reaction to a major event. 

The global community must ask “How can trade agreements and embargos impact sustained growth in the countries involved in the agreement compared to countries outside of the agreement, and how can changing these agreements positively affect the individual worker and small business?” Meric et al. proved that countries in NAFTA had a steady but comparatively lower GDP growth rate, at only 2.4% (23). The North American Free Trade Agreement is not inherently evil. However, it would be beneficial to make a change for many other countries, as it has been mentioned that these interconnections between countries are vital to the concepts of globalization and industrialization. It is key to balance the aspects of mental and physical health with workers and regulate business practices to reflect that. Workers like Ma Xianquian should not be giving their lives to produce goods for American consumption (Sparke, 103). Their deaths are entirely preventable. NAFTA support has died down over the years. It can be changed or amended through legislation to implement these new ideas and regulations; repealing or even replacing the North American Free Trade Agreement should be considered. 
