Think about the \"threat\" associated with \"free trade.\" Ross Perot once sugge

Question

Think about the "threat" associated with "free trade." Ross Perot once suggested that NAFTA would create a giant sucking sound, drawing jobs away from the United States. A discussion question might be, "If NAFTA was sucking away important U.S. jobs, why was unemployment in the United States at record low levels after NAFTA came into effect?"

Another question: If there is a giant sucking sound from Mexico to China as off-shored jobs have gone to China because of its low wages, what should Mexico do to battle unemployment? Response must be at least 200 words.

Explanation / Answer

Free trade is the trade agreement between two countries with absolutely no barriers in the trade of goods and services between the two countries. The threat that is most commonly associated with the free trade is that one company losses the jobs where as other country gains the jobs. The country which outsource its jobs to an other country instead of manufacturing in its own country losses all its jobs to the other country.

Ross Perot once in the presidential elections against the Bill Clinton has remarked that statement on the free trade agreement. It created negative affect among the people and subsequently Bill Clinton won. NAFTA is North American Free Trade agreement. The leaders of United States, Canada and Mexico signed the agreement. Once the agreement got signed, the trade relations between United States and Mexico has increased and the value of the trade has almost tripled.

In reality, NAFTA can never affect the economy of the United States. United states has the world's strongest and largest economy. The GDP of the U.S is the larger than Mexico and Canada. In that case, how can NAFTA affect U.S jobs? The answer is simple, it is just a controversial statement used by Ross Perot to win the presidential elections, it was his strategy to instigate the public. NAFTA can never take away the important U.S. jobs. And subsequently the employment in the country also increased. This agreement has helped all the three countries succeed. The GDP of the three countries has increased, and the employment has also increased.

NAFTA sucking away important U.S. jobs is just a controversial statement. And yes, the unemployment in United States is recorded low after the agreement. This ultimately proved that the employment levels has also increased. NAFTA was a spectacular success.

2) Since few years, all the off-shore jobs are being grabbed by China due to its low wages. China, followed by India has very cheap labor. And most of the jobs are being diverted to these countries. Since then, the Mexico has lost its war to China mostly. Due to which the unemployment in the Mexico has increased.

For Mexico to win the battle, it has to lower its wage rates, and most importantly not to compromise on the quality. China has a very low wage rate base, but it certainly compromises on the quality they are offering. That's the reason, people co-relate all the low quality production to China. All the products that are produced in China, are of low quality and the entire world knows it. If the best quality is to be given, then the product cost increases and ultimately the wage rates also increases. So, in my opinion, if Mexico focuses on the quality production by minimizing the waste and by increasing the productivity, there are chances of winning back the jobs from China. Success lies with the quality.

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