NAFTA
...ariffs on goods qualifying as North American."(Litka, 242) Also, NAFTA's ample employment protections are particularly important since Mexico does not enforce the liberal labor guarantees of its constitution that otherwise bear many similarities to U.S. and Canadian labor laws. NAFTA also promotes action to further the two main concepts of fairness and respect for others by promoting free trade, environmental and cultural integrity, and the prevention of actions that fall in the category of foreign corrupt practices as defined by U.S. law (e.g., bribery and money laundering) (Nelton, 12). Among the principles that expand upon the concepts of fairness and respect for others are: Respect for the Rules, Support for Multilateral Trade, Respect for the Environment, and Avoidance of Illicit Operations. From a society's point of view, if these principles are compromised, then corrective action is important. Making incorrect choices concerning employment, trade, intellectual property or environmental protection will lead to undesirable consequences, such as child labor, unfair trade practices, pirating of copyrights and environmental pollution. These actions have undesirable consequences at a societal level. In today's society, organizations are expected to be responsible citizens at home. In our global economy, organizations must also be responsible citizens abroad. This responsibility is enforced by laws and sanctions which organizations must respect or suffer the consequences of legal action. The free trade that NAFTA has established among the United States, Mexico, and Canada has greatly benefited the U.S. economy. During the years from 1994 to 1997, U.S. trade with Mexico and Canada rose 44 percent. This extensive growth is accredited primarily to the reduction of tariffs. As tariffs were lowered, U.S. goods became cheaper and more competitive in Mexican and Canadian markets, and at this lower price level the quantity demanded of U.S. goods increased. Therefore it becomes less expensive for U.S. firms to supply goods to Canada and Mexico as the supply curve shifts upward. In order to meet the new demand, the firms must hire new workers and increase investment. Between 1994 and 1997, 90 to 160 thousand jobs were created in the U.S. due to the increase of trade with Mexico, and 2.4 million jobs were dependent upon trade with Mexico and Canada (Harbrecht 12). The increase in employment and investment then leads to increased national income. The work of NAFTA has also served to benefit Mexico's economy; in accordance with the United States' economy, Mexico's exports have increased, more than doubling since 1993. The elimination of investment barriers has caused a dramatic rise in foreign investment from four billion in 1993 to ten billion dollars in 1998. NAFTA has enabled Volkswagen, IBM, and the textile industry to seek labor and materials in Mexico. In 1994, a Canada-based entrepreneur invested four million dollars in a metal-stamping plant. The plant is now a major material suppler for Volkswagen although it was originally intended to employ only 130 people. The plant currently employs 1,300 workers and generates 57 million dollars in sales each year (Ebrahim 24). NAFTA has also allowed IBM to create plants in Guadalajara that would otherwise have been built in Asia. As a result, the exports of IBM de Mexico have increased from 350 million to 2 billion dollars in five years and the increased exports have created over 270 jobs (Ebrahim 26). Mexico's textile industry, too, has grown as a result of NAFTA, in 1996 overtaking China to become the largest supplier of textiles to the United States. U.S. mills invest hundreds of millions of dollars to build plants in Mexico as an effect of the reduced tariffs and shipping time. It takes only eighteen hours to ship goods to the Mexican border, while it takes 3 days to China. Free trade under NAFTA has also encouraged international specialization, the production of only the goods that a particular economy can produce most efficiently. If the U.S. for example, is efficiently manufacturing cars and Mexico, producing corn, then the U.S. should produce only cars and Mexico, only corn. They are more efficient if they each produce at their highest output, and trade for other goods. International specialization increases efficiency, lowering consumer prices; consumers no longer have to pay for inefficiently produced goods. (Ball 111) With all the good effects of NAFTA unfortunately there are some negative effects. One of the greatest impacts on Canadian and United States economies has been loss of jobs and decreased wages. Even though NAFTA has created jobs in the export sector, other production industries have moved their facilities to Mexico where wages and operating costs are lower. Also, wages in Canada and the United...