Pro & Cons of the FTAA

By Alexis Writing

The Free Trade Area of the Americas is a proposed agreement to open trade borders among all of the nations of North and South America. The FTAA would eliminate tariffs and other barriers to trade across all member countries. The proposal is similar to the North American Free Trade Agreement between the United States, Canada and Mexico, but the FTAA is much farther reaching in scope. The FTAA gained widespread attention at the Summit of the Americas in Quebec City, Canada in 2001. Ever since, it has been a lightning rod for those opposed to globalization and corporatization.

Pro: Free Trade is Good For Economic Growth

Free trade sparks competition. In developed countries competition could lead to optimization of resources and lower the cost of goods and services. This will lower the cost of labor and reduce overhead, increasing profits and promoting economic growth. This will, in turn, can create more jobs and raise overall income levels.

Pro: Free Trade Can Close Economic Gaps

Since NAFTA was passed in 1994, the large economic gaps that have separated the United States and Mexico have begun to close. Mexico's exports have risen substantially, its gross domestic product has risen and more American businesses have relocated to Mexico, decreasing national unemployment rates. A bolstered economy has also stabilized Mexico politically. Democratic freedom has increased with economic growth. It is feasible that developing nations in South America beleaguered by authoritarian rule would also see revival of the democratic process with free trade.

Con: Free Trade is Harmful to the Environment and Labor

Free trade influences developing nations to lower emissions standards and reduce labor laws to entice large corporations to relocate from industrialized countries. These companies increase profits and reduce overhead by ignoring emissions standards and paying the local workforce substandard wages. In developed countries such as the United States and Canada, income disparity and unemployment goes up as blue collar jobs are relocated from industrial cities to third world countries. In turn, fewer jobs are available to unskilled labor.

Con: The U.S. Isn't Fully Committed

The United States is by far the largest economy in the Western Hemisphere. For the FTAA to be successful, the United States would have to have an unadulterated commitment to free trade throughout both continents. Critics claim that the United States insulates itself from the realities of free trade by creating agricultural subsidies that would severely limit the importation of food products. The United States demands free trade from its partners, but sets a different standard for itself.