the United States Canada and Mexico The Three Amigos rest in peace takeoff they do everything together they live together share oceans together are close together and uh have borders together my point is they're all in the same space so why not trade over those borders together okay they've traded for centuries but why not do it without charging each other taxs for trading something called free trade the North American Free Trade Agreement or NAFTA is exactly that a free trade agreement between these three Pals or actually it's called the usmca today after being renegotiated but most
people still call it NAFTA 2.0 or new NAFTA so let's stick with the easier name some say this Trade Agreement saved their life and was a gift sent directly from God others don't like it as much so which one was it the best trade deal of all time or the worst or something in the middle first why I mean why bother in the first place seems like a ton of effort to rate this 100 million page document and have everyone go through it for years adding little appendages it's simple why the US wanted economic power
and these two countries are 100% of the countries they border so an economic Union made sense after the Soviets crumbled the US realized that it wasn't the commies that were their biggest competitors it was their friends for instance Japan was booming in the80s with their fancy cars and video games there were real concerns they would economically overtake the US plus Europe just made one large free market at the time they were on their way to pass the us too they had to make their own free trade zone to keep up with these guys it started
with only Canada they have barely any natural borders and the same culture and all and the main natural border they do have the Great Lakes they realized it was in both of their interests to share this region and both ship through it and then Mexico wanted to deal with the us but Canada got jealous that they would get undercut and become America's second largest trade Partners so they all negotiated for one huge trade agreement it wasn't only to get ahead though during the80s Mexico was having a pretty tough time financially just a usual debt crisis
and all it led to an increase in things like drug production violence and most importantly for Americans at the time hopping over this fence to make a stable living to Americans it showed us prison and crime rates were on the upswing in the'80s it doesn't matter if it wasn't fully caused by this border it wasn't by the way but it matters matters that the public thought it was the idea of stabilizing Mexico through free trade was a much better selling point for NAFTA to Americans than protecting intellectual property rights between them and the Canadians were
so as the world's largest economy both production-wise and physically it's a no-brainer that this was a fully us-led agreement NAFTA was proposed by Reagan negotiated by HW Bush signed by Clinton to take effect in 1994 and warned against by Ross perau have no environmental controls no pollution controls and no retirement and you don't care about anything but making money there will be a giant sucking sound going south and it generally did what it was meant to do boring but important things like eliminate barriers to trade protect IP RS increased overboard investment and eventually all tariffs
were gotten rid of by 2008 a great success except if you're this guy then it wasn't so great whether it to make NAFTA more protectionist or to update it to the modern world after all this is what the internet looked like when NAFTA was signed NAFTA was Rewritten in 2017 it added new sections on digital technology environmental obligations more car parts originated in the US more access to Canadian Dairy and slapping steel tariffs back on the table in the name of protecting us jobs shame they couldn't protect this jobs too NAFTA 2.0 took effect on
Canada Day 2020 and honestly it is generally seen as more mutually beneficial to all parties for simply just being updated to the modern world but before we jump to any conclusions on how NAFTA has done let's ask these two trumps if this deal was worth it in the first place what do you say 45th president Donald John Trump the worst trade deal ever made by any country I think in the world damn the main argument against NAFTA that we all keep going back to is about losing our jobs mainly American jobs also called sectorial shifts
if you want to sound fancy the us is just losing jobs left and right NAFTA is bleeding jobs from America okay throw me some numbers Ross per predicted 6 million jobs lost yet the economic policy Institute estimates it to be 700,000 but Bernie Sanders has 800,000 Obama says 1 million and Trump simply says Millions you can't really measure who lost their job from NAFTA or just cuz the business couldn't keep up with costs but whatever the real number of American jobs lost is it's likely around the high 100,000s and it is true that over 880,000
manufacturing plants have shut down in the US since NAFTA you can't deny there are many communities especially around the Midwest completely destroyed mainly from their Central industry packing up and saying toodles in fact let's play a fun game called is it Michigan or is it the Soviet Union if you said these three are Michigan you are correct this one was actually Pennsylvania I'm even from a small town near the Rust Belt who lost the entire mining industry was built on and it is sad there's honestly no future for these towns most shrinking to obsolesence in
the global market there's a reason it's called the Rust Belt not the luster belt so manufacturing left the us but you know what else left where else agriculture in Mexico that was a weird way to word it but farmers in Mexico were possibly hit even harder than Factory workers in the US and Canada instead of being undercut by cheaper wages they were outproduced by Massive American firms with about three times more subsidies given to American Farms than Mexican Farms were massive companies like Monsanto and Nestle are able to come in and snatch up cheap Mexican
land with less protection cutting cost by keeping their wages down a few less pesos than they should have been oh yeah and Mexico lost roughly two million farming jobs total mainly being replaced by us Mega Farms that along with an ex change rate crisis which crashed the economy caused many more Mexicans to flee into the US than before NAFTA with immigration not declining until 2008 when breaking bad was released and they saw Walter White's American Monopoly steal the Mexican Salam Mona's business it's an old trade job swap manufacturing for farming at least the Mexicans got
these new industrial jobs until you see that the conditions sometimes weren't the best 12-hour days much less environmental regulations and no health insurance was needed the most expensive part of building an American car according to the bro perau and don't think it was so much better in the US American wages famously didn't keep up to productivity shown by this graph which pops up in I swear every single discussion about modern US economics NAFTA didn't cause this but it could have played a role in widening it firms threatening easy relocation is a great way to keep
wages down as for Canada most of the US's issues apply to them too plus fully opening up the floodgates on this border just by sheer proximity alone made 70% of Canadian exports go to America and 55% of Canadian Imports are us made it's usually not a great idea to be so dependent on one foreign country economically but that's a story for another day in short opening up these borders made a shift to our competitive advantages and unfortunately those shift caus a life of pain for many parts of North America now let's ask the anti-trump what
do you think of NAFTA anti-trump the best trade deal ever made by any country I think in the world sheesh for all the Gloom and Terror given to NAFTA there has to be something it does to make it worthwhile and there is let's look at the overall stats total jobs up average wages up more or less prices down total manufacturing output up trade between the boys tripled in three decades foreign investment quintupled and all the original boring goals were achieved the average North American is better off after NAFTA than before as for the American job
losses well if you extend this percentage of manufacturing jobs graph back past the '90s you'll see it's declining at exactly the same rate as it was after NAFTA as the US shifted to more fancy White Collar jobs truthfully if anything happened that stole these American jobs it was the rise of these Asian countries not opening up the Mexican border and if anything NAFTA has helped North America fight against the Tigers and Dragons of the east by boosting total North American production capabilities even if it means losing some manufacturing to Mexico and farming to the US
the transformations in this time are impeccable incredible amazing Goods became much cheaper relative to where they have been in the past obviously not fully thanks NAA but in the 1950s around 40% of American Income went to buying food and clothes nowadays that's more like 10% Mexico transformed from an ultra nationalized borderline petrol State constantly increases to a highly Diversified economy on Pace to become a top 10 economic power roughly soonish and about countless literally export based jobs were created in North America birthing entire new Industries straight from the womb of Adam Smith like vehicles and
Industrial Supplies in Mexico the tech sector in America and with it new types of manufacturing and quite possibly the energy sector in Canada and the US shedding the Region's Reliance on the Middle East and Venezuela as areas to go hunting for oil of course these new Industries could have just been ready to take off at around the same time the deal happened I don't know how many people would actually credit apple and Dell success to NAFTA but the deal made the US shift to technology rather than manufacturing much quicker than a more protectionist government could
have accomplished watering the technology flow according to many economists the value saved by cheaper prices is enough to compensate for the value lost by the loss of jobs and more so to them it's a good trade-off even if that flow never happens in reality but it still hurts though it hurts the ego of the USA America and especially the Midwest is a culture that builds things you know getting deep and dirty with your hands putting together a Ford LTD on their break from blasting away steel for the macak bridge that's the America we know in
fact it was a molten spill in a steel factory that turned turned me into the man I am today not wearing a turtleneck sitting with a latte in your San Diego office drawing your flowcharts on a full wall whiteboard making I don't know a blockchain leave that coding to the Japanese says the midwestern towns destroyed by free trade the US really is No Country for Old Men new ideas can and will replace you so there is Backlash when your culture and way of life was ripped away from you but would you trade that for higher
Innovation and lower prices uh you don't have to make that decision it was already made for you in 1994 and if you live inside of this continent or out of it you have to deal with the effects of a more competitive North America for the better or for the worse