The North American Free Trade Agreement (NAFTA) is a trade agreement between the

Question

The North American Free Trade Agreement (NAFTA) is a trade agreement between the United States, Canada, and Mexico whose purpose is to eliminate tariffs between the countries and promote all aspects of international trade. There are many arguments for and against the treaty. One of the arguments against centers on the fact that Mexican industries do not have to meet the same environmental regulations as industries in the United States and Canada. The U.S. and Canada have intervened in the marketplace and tried to internalize some of the costs of pollution by placing regulations on the amount of pollutants that industries can emit. Opponents of NAFTA point out that pollution is largely a free good in Mexico, and that being free to pollute gives industries in Mexico an economic advantage over those in the U.S. and Canada. Is there anything in what we have studied, particularly in Chapter 14, that can point us towards an equitable solution to this problem while still protecting the environment we all share? What is that solution?

Explanation / Answer

yes, these conditions and situation definitely helps Mexico than US and Canada. the firms which are operating in US and Canada are spending more and more funds on environmental protection and spending huge amounts on protection of climate and environment. it shown impact on the profitability of the firms, the firms un US and Canada will get lower returns where as the firms operates in Mexico will get more returns. for this, business people shown interest to establish their units in Mexico rather than US and Canada. it also impacts on employment levels in both the nations.

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