Sunday, November 18, 2007

Maquiladoras and NAFTA


In January 1994, Mexico, the United States, and Canada signed a Free Trade Agreement (FTA) creating the largest trading bloc in the world. The North American Free Trade Agreement (NAFTA) created a system that eliminated tariffs, quotas, and other trade barriers between the three countries over a fifteen year period (Hashemzadeh, 1997) Economists believed that with the elimination of barriers to trade overall economic income would rise throughout the continent. There were skeptics to this new agreement who predicted that the addition of Mexico to the trade group, with its significantly lower wages, would result in an exodus of industrial jobs from the United States (U.S.) and Canada.


Overall, trade between Mexico and the United States rose from $98.3 billion to $134 billion in the first two years after signing the agreement (Hashemzadeh, 1997). While maquiladoras were already in place before NAFTA, Mexico saw a surge in their productivity after its trade agreement with the U.S. and Canada.


Economics aside, the central issue of NAFTA is that of ethics. Discussion dissecting the ethical implications of supporting a system with substandard wage and employment practices is necessary to determine if the economic benefit outweighs the ethical deficit. Ultimately is it ethical to encourage a system of trade which encourages low wages and substandard working conditions, as long as those conditions are not on U.S. soil?


While NAFTA has greatly benefited Mexico economically through increased exports, strengthened confidence of international investors, and a surge in production, there are intrinsic problems with a system of substandard labor conditions and unequal treatment. Since the onset of NAFTA there has been a steady increase in maquiladora production, a labor force comprised mainly of unskilled, untrained women. Maquiladoras, while providing work for those that may not otherwise have the opportunity for employment, promotes a cycle of low-wage jobs with a high turnover rate due to the demands of strenuous manual labor. Additionally, this turnover rate is encouraged by maquiladora owners as it creates a constant influx of new workers, keeping wages low.


From a business standpoint it must be argued that NAFTA has benefited its member nations. For the longevity of this union, however, there are certain standards of morality that must be addressed including labor conditions and compensation that apply to the production of all products exported from each country. Issues of base levels of pay, working conditions, maternity and sick leave, and opportunities for advancement must all be discussed before a successful trading future is possible between any members of NAFTA. Allowing one country in the agreement to continue practice that would not be acceptable in the others is at its base unethical.

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