Are free trade agreements harmful to the U.S economy?

Free Trade Agreements A contract between two or more countries to reduce or eliminate any government imposed barriers to the free flow of goods, services, and money across national boundaries.

Is Free Trade Fair Trade?  When a country tries to produce most of the goods and services its people require the economy grows slowly  When a country exports its most plentiful or easily produced goods & imports goods others can produce easily the economy grows rapidly.  Trade agreements among nations establish favorable rules of trade and reduce trade barriers  BUT free trade has been rare throughout history

Protectionism  Protectionism is when countries use various tools of trade to protect industries OR encourage consumers to buy certain goods and services  Throughout U.S. history gov’t has used protectionism to control trade and promote domestic industries  In recent years U.S. gov’t has advocated lifting trade restrictions with some countries and made regional trade agreements in Africa, Asia, Latin America and Middle East

NAFTA  North American Free Trade Agreement  Canada, USA, Mexico  Early supporters of NAFTA believed it would create a level playing ground for farmers in all members nations by reducing tariffs on farm products  NAFTA did not restrict USA from giving subsidies to farmers-allowing U.S. farmers to sell goods more cheaply than Mexican farmers  SO talks about creating Free Trade Area of the Americans (FTAA)- extend NAFTA to all 34 democratic countries in the Western Hemisphere & largest in the world

What about the USA?  2012 Obama announced intention to create Trans- Atlantic Trade and Investment Partnership with 27 nations of the European Union  Proponents claim it will lead to further liberalized trade and create new opportunities for American businesses  BUT effects of free trade within U.S have always been controversial- during periods of high unemployment protectionism is seen as necessary to shield domestic industry and jobs

The Debate Pro  Free trade opens markets for U.S. goods-creating more jobs  Inexpensive imports means greater choice, lower prices and higher standard of living  Competition spurs improvement in U.S. productivity- generating profits ($$) for businesses and millions of jobs Con  Free trade agreements have encouraged U.S. businesses to move to developing nations where labor is cheap  Therefore Americans lose their jobs or must take lower wages  Gov’t loses tax revenues and must pay more in unemployment benefits

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