Since the mid-nineteen-hundreds, America’s economy has been based on the idea of free trade. Free trade takes place when two or more countries come together to agree on disposing of trade barriers and tariffs. Once the barriers and tariffs are gone, the countries are more likely to be encouraged to trade with one another, and this supposedly helps the partners economically by providing new markets to trade within. Although this concept seems perfectly logical, the argument over free trade is a never ending battle within United States. The state of America’s economy is due primarily to free trade throughout the world, but is free trade truly helping America and its citizens, or has it given opposing countries the upper hand? (“Free Trade Area”)
The North American Free Trade Agreement, or NAFTA, was established in 1993 and officially put into effect during 1994. It eliminated all trade barriers between the United States, Mexico, and Canada on January 1, 1994 (“Timeline: World”). Many thought that this document would provide more employment within America and overall raise the living standards of all countries taking part, but others thought differently. In their, minds it was be a poor decision that would give away the United States’ job opportunities to other countries whose citizens would work for lower wages (“Fast-Track”). Americans are known for their values and working hard to earn every penny that they have, and this agreement was not in support of their protectionism. In American citizens’ minds, it takes away their dignity (“Protectionism”).
Protectionism is something that is not found too often in America today. It is the frame of mind that a country should not be completely reliant on other areas for items of everyday need. Recently, in February 2009, the United States’ government funded a $700 billion stimulus package. The idea of this was that it would create jobs while improving the way Americans live. For example, roads and bridges would be built and repaired. All items such as steel and iron used in the projects, with few exceptions, would also be created in the United States. Advocates approved of this plan because of the recession taking place. It gave them a chance to get back on their feet; however, critics claimed that it was a waste of money. Even though it did create employment, it was quite expensive, and it could create a “trade war” by depriving other countries of their work opportunities. This would not be good for American society due to the fact that the United States hardly sales its own products within itself, and what few it does are extremely expensive (“Protectionism”).
The Free Trade Area of the Americas, FTAA, is taking the place of NAFTA. Parts of the government have decided that free trade should be expanded beyond Canada, America, and Mexico. Currently the FTAA includes all countries in the western hemisphere, excluding Cuba. Cuba was excluded because of its communist ways. The whole idea of FTAA does not go over well with many because of its contribution to NAFTA, and people believe that because NAFTA was such a failure in helping America, that expanding its boundaries would only worsen the issue (“Free Trade Area”).
The Central American Free Trade Agreement is expected to have the same effect that was intended with the North American Free Trade Agreement. It was signed and put into effect during 2005. Bush signed this agreement to join America and five other central American countries in free trade. The countries that are current members of CAFTA are Guatemala, Honduras, El Salvador, Costa Rica, and Nicaragua. It is said that the agreement will probably do just as NAFTA did by sending more work away from the United States than it will establish. Also, it seems as though it may be an insult to people of central America as if Americans look down upon them as cheap labor. CAFTA barely made it through approval, and it looks as though it will just continue the damage that has already been created by NAFTA (“Central American”).
America is quite familiar with what is known as sanctions. Sanctions are when a country forbids trade to another country in order to make them suffer for such things as the views they have or the government that they practice. America has been using these since World War I and since then has formed over 115 sanctions against 70 different countries. In the 20th century, the country was involved in more sanctions than any other. Experts say that these sanctions are not extremely effective. It usually ends up hurting the country who formed it more than the country that it was formed against, and it rarely changes any views that it was set to change, not to mention the fact that it does not necessarily effect the leaders of that country. It seems to put stress on the poorer lower-class citizens that have nothing to do with the choices of the country (“Sanctions”).
The trade deficit of America is at an all time record. The imports to America were $650 billion dollars higher in value than the exports during 2004. When a trade deficit takes place, a country’s value in imports outnumber their value in exports. This is never a good thing. It means the country is buying more than it’s selling causing more debt to pile on. During the 70s America was in a time of trade surplus. They were selling more than they were buying, and it was a great time for business. The strength of the dollar at the time was quite high, but since then it has depleted. Since America is involved in trading with so many countries and known as a super power, the low value of the dollar is seen as an alarm to other nations’ economies. These days, the American dollar cannot get one as far as they would like (“Update: Trade”).
While joining with all of these other nations for trade, many wonder if the United States is truly looking out for itself in the long run. Especially with health concerns. The purpose of CPSC, Consumer Product Safety Commission, is to regulate all products coming into America from other countries as far as health hazards, with the exception of food, drugs, and items of transportation. In 2007, a large number of toys from China were recalled just before Christmas. They contained large amounts of hazardous lead paint. These were just a few of the 427 recalls that year. Who is to blame for all of the mistakes that slip through the cracks of the CPSC? Americans argue many sides.
They have no clue who to blame whether it be the United States government, the Chinese Government, Chinese manufacturers, the stores who sale Chinese products, or just the fact that Americans have a high demand for low-cost products. In all truth, Chinese manufacturers realize the mistakes that they make. Just as it was in the situation with the lead-painted toys, the Chinese manufacturers would rather pay the fine for not using the right type paint rather than produce the toys with the right paint for a higher price. It saves them money, and because they produce so many of American’s household items today, it would be difficult if America started an argument with China. They could put a halt on many daily items, and they know they have a hold on the United States (“Product Safety”).
Americans, as well as most other countries, are trying to conform to globalization. In reality, this form of the world will never exist. It is the idea that every, single economy in the world will flow together with ease without the interference of trade barriers. Even when the idea is not exactly mentioned out loud, it slowly shapes the world into what it is becoming each and every day. Cultures and religion are part of the idea as well. The way the world is shaping into globalization is not actually helping the poor. It is only catering to the rich. The poor are just being used for labor at cheaper rates around the world. Is it truly what we want our country to come to (“Globalization”).
There is one organization over world trade. As one would guess, it is known as the World Trade Organization, WTO. It was just recently developed in 1995, and replaced what was known as GATT, General Agreements on Tariffs and Trade. GATT had been active since 1947. Now the WTO is in charge of handling disputes among countries in trade. The expectations of this agreement is to open up free trade throughout the world and America and help for globalization. Some say that it has failed to do so because it singles out the poor. Just like the idea of globalization, it is said that it is just a way to find cheap labor. Others claim that it is opening up the world to new possibilities (“Update World”).
American trade has come a long way. American society has brought itself from nothing to a super power of the world. Free trade has had a major effect on the country and it will continue to as well. The world will always strive to reach complete globalization. Only time will tell if effects of the trade deficit and free trade and will completely drag down or bring and uprising the American economy.