Free Trade Agreements Are Free Trade Agreements Essay

Free Trade Agreements

Are free trade agreements a good policy for nations? Given that there are 200 free trade agreements in place globally, there are clearly benefits, but what are the negatives? This paper explores the positives and negatives of free trade agreements, and this paper delves into the NAFTA pact between the U.S., Canada, and Mexico, for the upsides and downsides of that agreement.

What are Free Trade Agreements and why does the U.S. engage in FTAs?

International Trade Administration (ITA) explains on its website that Free Trade Agreements (FTAs) have proved to be "…one of the best ways to open up foreign markets to U.S. exporters" (www.trade.gov). Trade agreements "…reduce barriers" to United States exports, they "protect U.S. interests," and they "enhance the rule of law" with the country that is partnering with the U.S. (www.trade.gov).

American companies can export their products less expensively when trade barriers are removed because this relationship with other countries creates a "…more stable and transparent trading and investment environment" (www.trade.gov). In fact forty-one percent of the American goods that are exported went to FTA partner nations in 2010, and exports to those countries involved with free trade and the U.S. are growing at a "…faster rate than exports to the rest of the world," the ITA explains.The main economic FTA the U.S. is involved with is NAFTA, the North American Free Trade Agreement between the U.S., Canada, and Mexico, which went into effect in 2004. That said, the U.S. has three FTAs that are pending approval by Congress; those are a free trade deal with Colombia, with Panama, and with South Korea (Cooper, 2011). As to the potential FTA with Korea, Hyun Chong Kim writes in the peer-reviewed SERI Quarterly that the biggest beneficiaries for Korea will be "…consumers whose purchasing power will increase as a result of increased selection, increased competition, and inexpensive commodities that become available in the market" (Kim, 2011, p. 16). For example Kim points out that as of 2011, a kilogram of beer in Korea in 2005 was $43.70; that is the most expensive in the world, and presumably a FTA with the U.S. could lower that price considerably (Kim, 15).

NAFTA Advantages: There are several perspectives as regards the….....