Ross Perot a former presidential candidate of the Reform Par

Ross Perot, a former presidential candidate of the Reform Party, which was a third political party in the United States, had strongly objected to the creation of the North American Free Trade Agreement (NAFTA), which nonetheless was inaugurated in 1994. Perot feared the loss of American jobs to México, where it is much cheaper to hire workers. What are the merits and demerits of Perot’s position on NAFTA? Considering the recent economic developers in North America, how would you assess Perot’s position on NAFTA?

Solution

Since the inception of NAFTA, many American companies indeed have invested heavily in Mexico, sometimes relocating production from the United States to Mexico. Although this might have temporarily caused unemployment of some American workers, they were eventually rehired by other industries often for higher wages. Currently, the unemployment rate in the U.S. is quite low by historical standard. At the same time, Mexico has been experiencing a major economic boom. It seems clear that both Mexico and the U.S. have benefited from NAFTA. Mr. Perot’s concern appears to have been ill founded.