Pros and Cons of Free Trade

• Pros- • 1. Free Trade increases sales and profits for US

businesses .

1. Free Trade increases sales and profits for US businesses .

• New York Times wrote in 2006:• "Economists can promote the very real

benefits of a robustly growing world: when they sell more overseas, American businesses can employ more people."

1. Free Trade increases sales and profits for US businesses .

• Peterson Institute for International Economics estimates that ending all trade barriers would increase U.S. income by a whopping $500 billion annually.

Pros and Cons of Free Trade

• Pros- • 2. Free Trade is an opportunity to financially

help some of the poorest nations in the world.

2. Free Trade is an opportunity to financially help some of the poorest nations in the world.

U.S. free trade benefits poorer, non-industrialized nations through increased purchases of their materials and labor services by the U.S.

Pros and Cons of Free Trade

• Pros- • 3. Free Trade will create better jobs for people

in the USA. They will not have to do as much manual labor.

3. Free Trade will create better jobs for people in the USA. They will not have to do as much manual labor.

• Through Comparative Advantage there will be a need for higher skilled jobs in America because, as U.S. businesses grow from greatly increased sales and profits, demand will grow for middle-class higher-wage jobs to assist the sales increases.

CONS of free trade

Pros and Cons of Free Trade

• Cons- • 4. Free trade has caused more U.S. job losses

than gains, especially for higher-wage jobs.

4. Free trade has caused more U.S. jobs losses than gains, especially for higher-wage jobs.

• "While corporate profits soar, individual wages stay the same, held at least partly in check by the brave new fact of outsourcing -- that millions of Americans' jobs can be performed at a fraction of the cost in developing nations near and far."

4. Free trade has caused more U.S. jobs losses than gains, especially for higher-wage jobs.

• In his 2006 book "Take This Job and Ship It," Sen. Byron Dorgan (D-ND) decries, "... in this new global economy, no one is more profoundly affected than American workers... in the last five years, we've lost over 3 million U.S. jobs that have been outsourced to other countries, and millions more are poised to leave."

5. NAFTA- The Giant Sucking Sound…

• "Since the North American Free Trade Agreement (NAFTA) was signed in 1993, the rise in the U.S. trade deficit with Canada and Mexico through 2002 has caused the displacement of production that supported 879,280 U.S. jobs. Most of those lost jobs were high-wage positions in manufacturing industries

5. NAFTA- The Giant Sucking Sound…

• "The loss of these jobs is just the most visible tip of NAFTA's impact on the U.S. economy. In fact, NAFTA has also contributed to rising income inequality, suppressed real wages for production workers, weakened workers' collective bargaining powers and ability to organize unions, and reduced fringe benefits."

Pros and Cons of Free Trade

• Cons- • 6. Many free trade agreements are bad deals

for the U.S.

6. Many free trade agreements are bad deals for the U.S.

• In June 2007, the Boston Globe reported about a pending new agreement, "Last year, South Korea exported 700,000 cars to the United States while U.S. carmakers sold 6,000 in South Korea, Clinton said, attributing more than 80 percent of a $13 billion U.S. trade deficit with South Korea...

Pros and Cons of Free Trade

• Con- • 7. Workers in other countries are being

exploited and harmed.

7. Workers in other countries are being exploited and harmed.

• The impact on workers in countries as India, Indonesia, and China has been even more severe, with innumerable instances of starvation wages, child workers, slave-labor hours and perilous work conditions.

Pros and Cons of Free Trade

• 8. Free Trade is bad for the environment

8. Free Trade is bad for the environment

• "The lack of international laws for environmental protection, for example, encourages firms to go to the nation with the weakest standards."

NAFTA Reading

• Imagine you are a senator in the US Government in 1994.

• The NAFTA bill is being voted on. • First you need to summarize what NAFTA is. • Second, would you support it? Why or Why

Not?