Economic Benefits of NAFTA
NAFTA or the North American Free Trade Agreement is a treaty between the US, Canada, and Mexico and this treaty relates to their trading activities. ‘Â This particular trade agreement is considered a very powerful treaty with wide application in the involved North American countries. ‘Â In effect since 1994, NAFTA basically aimed at eliminating taxes on goods that are being delivered to and from the three countries. ‘Â Below are some of NAFTA’s economic benefits:
1. Reduction of inflation
With the elimination of taxes and tariffs on goods that are shipped between the US, Canada, and Mexico, the cost of the involved goods automatically decreases. ‘Â Lower price of goods in turn will decrease inflation which refers to a period of increased prices for all basic goods and services for a particular country. ‘Â With lower prices, the economy of the country involved is stimulated by means of increased spending by the people involved.
2. Increase in Investments
Whether one lives in the US, Canada, or Mexico, this free trade agreement will certainly be felt in terms of more investments. ‘Â Without taxes on goods, more businesses will gamble on investing in a particular country. ‘Â Low or no tariffs basically translates to lower operations cost for all businesses, which allow them to grow bigger and compete with larger and more established organization s.
3. Generation of more jobs
The increase in trade agreements between the three nations will also benefit their respective employment sectors. ‘Â With increased investment and more goods or businesses coming in to a particular country, more people will also get jobs to handle these goods and/or services.
Overall, NAFTA benefits all three countries that went into agreement regarding their trade practices. ‘Â The elimination of tariffs on goods and services basically spurs economic growth from increased trade and activity between these countries. ‘Â Starting from goods transfer and delivery, to distribution, and up to the selling point, trading activities increase and this may later result to more gains in the economy.