The Greatest Consumer: Long Term Economic Effects of the North American Free Trade Agreement on the United States Domestic Industry

This thesis analyzes the effects of the United States involvement in its first, and longest, multilateral free trade agreement with its two largest neighbor nations: The North American Free Trade Agreement. The research question which is explored and analyzed here is: How has the North American Free Trade Agreement affected the United States domestic industry and if the United States should involve itself in this type of agreement? With the United States shift from isolationist and protectionist practices it came to accept globalist economic policies, such as free trade. However, as the world's largest consumer the acceptance and implementation of these free trade policies has led to economic harm. This is shown through the historical data of trade between the countries involved in the North American Free Trade Agreement and it is found that there are significant harmful effects on the United State as a result of this agreement. Specifically, the United States heavy loss of domestic industry and loss of income. The United States involvement in the North American Free Trade Agreement is described and analyzed using the logic models of classical and neoclassical trade theories. It is found that these trade theories' inappropriate application could explain the United States involvement in the North American Free Trade Agreement. Finally, using the ideas of classical and neoclassical trade theories it is determined that the best option for the United States to rebuild its domestic industry is to participate in protectionist and isolationist policies.
Keywords: The North American Free Trade Agreement, NAFTA, Classical Trade Theory, Neoclassical Trade Theory, United States Domestic Industry, Domestic Industry, Consumer Nation, Producer Nation, Comparative Advantage, Supply and Demand, Trade Deficit, Protectionism, Globalism