In 1992, the U.S., Mexico, and Canada agreed to enhance trade between the three countries in what is called the North American Free Trade Agreement (NAFTA). The agreement removed tariffs between the countries and had the goal of eliminating the obstacles to investments between the countries and to the movement of products and services between the countries. Opponents of NAFTA argue that it has cost many jobs in the U.S., jobs which were primarily moved to Mexico. Most economists argue that, while some jobs have been lost, the net effect of NAFTA on all three countries has been positive. Jobs have been lost in some industries and gained in others. Overall, manufacturers have used the flexibility afforded by NAFTA to strengthen the competitiveness of their products. This is especially true for automakers which use factories in the U.S., Canada, and Mexico to achieve the desired balance of high quality and low cost.

Some note that a problem with NAFTA is that it was written before the boom in e-commerce and as a result must be revamped to take internet sales into account. Also, some note that it is weak on labor and environmental protections which are important to the neighboring countries. Others note that we might be better off with bilateral trade deals with each of the countries—an agreement with Mexico and an agreement with Canada.

Required

As a policy advisor to industry and professional groups of management accountants, write a brief statement that offers your thoughts on whether NAFTA should be deleted, refined, or left alone, and how these changes might impact management accountants.