Regional Analysis: North American Free Trade Agreement
In today's globalized economies, virtually every country in the world belongs to some form of regional integrated trade organization whether by direct membership, bilateral or multilateral agreement. Regional integration is a process by which sovereign states in a particular region enter into an agreement to promote economic growth through the reduction of barriers to trade restrictions and safeguard common interests such as the environment. The removal of trade barriers results in a free trade zone thus creating a single market. Sovereign nations have many differences, some may be more economically sound and others may have a greater labor force or better technology. In the end, all regional nations must find a method to work together for the common good of all parties. The development of the North American Free Trade Agreement (NAFTA) was to solidify the nations occupying the North American continent, Canada, the United States (U.S.) and Mexico. Many proponents question the success of NAFTA for these nations. This essay will examine the advantages and disadvantages of regional integration and the regional economic development of these nations as members of NAFTA.
NAFTA is trade agreement implemented January 1, 1994 between the U.S., Canada and Mexico which removes restrictions on trade between the three countries to encourage free competition, improve investment opportunities and increase market access "for small and medium-sized enterprises (SMEs)" (Tomasetti, H., 2004). Some of the advantages NAFTA has afforded its members are the eradication of tariffs, product price reductions and increased profit margins. NAFTA has eliminated tariffs on all goods traded betw...
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...oor results of NAFTA in Mexico leaves one asking who truly benefits from NAFTA and are the countries in the Northern Hemisphere prepared for regional integration under a multilateral or unilateral agreement.
References
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Moreno-Brid, J. C. (2007). Economic development and industrial performance in mexico post-nafta. Retrieved January 25, 2008 from http://www.eclac.cl/celade/noticias/paginas/3/28353/JCMoreno.pdf
Senate Committee of Foreign Relations (2004). NAFTA: Ten years after. Retrieved January 24, 2008 from http://www.america.gov/st/washfile-english/2004/April/20040420162429AEneerG0.7202722.html
Tomasetti, H. (2004). The benefits of nafta for smes. Retrieved January 23, 2008 from http://www.ita.doc.gov/td/tic/fta/nafta/roo.htm
All walks of life are presented, from prevailing businessmen of white-collar status, to those of the working class and labor industry, as well as individuals who deal in the black market of smuggling illegal immigrants across the border into the U.S. Hellman’s work explores the subject of Mexico’s economic situation in the 1990s. NAFTA (North American Free Trade Agreement) closely tied the United States and Mexico during this period, as well as similar policies such as GATT (General Agreement on Tariffs and Trade) that were also created. These issues pertaining to economic policies between the two nations, Mexico and the United States are seen highlighted throughout her work.
In this paper I will discuss the history and practices of the Maquiladora industry. I will discuss its background, its problems, the benefits it offers to United States companies, and the impact the NAFTA has and will have on the industry. In addition, I will make a suggestion on a possible strategy the Maquiladoras can adopt in order to address the challenges brought on by the NAFTA, to ensure it remains a strong force in the future.
After three years of debate NAFTA was established in 1994. Fears concerning NAFTA included job creation, loss and transfer, wages and infrastructure. (Ganster/Lorey 188-189) However, with the implementation of NAFTA the economy grew. Ganster and Lorey reveal that bilateral trade increased by $211.4 per year from 1989 to 2004. Commerce grew by 20 percent in the first six months of 1994. There were advantages and disadvantages of NAFTA, nevertheless, NAFTA “intensified the integration of the two economies rather than distancing them.” (Ganster/Lorey 190)
Very high population rates do not correspond with working labor force, in that (Polaski 2004) the Mexican labor force grew from 32.3 million immediately before NAFTA to 40.2 million in 2002, meaning that Mexico needed almost a million jobs a year simply to absorb the growth in labor supply. Many theorists suggest that a free trade zone will increase employment, by the increase demand for labor therefore creating a vast rapid workforce. However, NAFTA has greatly impacted manufacturing employment, by producing a low small net gain in hobs in Mexico, in that jobs created in export manufacturing have barely kept pace with jobs lost in agriculture due to imports (Polaski 2004). There has been a visible weakening in domestic manufacturing employment, related in part to increase import competition. In addition, the cause of a decline in domestic manufacturing employment is caused due to the relocation of the maquiladora factory workforce, which the United States has relocated the maquiladora assembly plants to China and Indonesia, because of low wage, cheaper labor workforce, skilled workforce, and less environmental protection laws. The maquiladora assembly plants in the late 20th century have disappeared
The goal of NAFTA was to systematically eliminate most tariff and non-tariff barriers to trade and investment between the countries. NAFTA has allowed U.S., Mexico, and Canada to import and export to other at a lower cost, which has increased the profit of goods and services annually. Because the increase in the trade marketplace, NAFTA reduces inflation, creates agreements on intern...
“The Perilous State of Mexico.” The Wall Street Journal. Dow Jones & Company, 21 Feb. 2009. Web. 16 Feb. 2014.
NAFTA, or, the North American Free Trade Agreement is an agreement signed by the USA, Mexico and Canada that effectively reduced and sought to eventually eliminate all tariffs from items traded between the three countries. This trade bloc has very directly affected the state of Texas as it is right on the border and actually comprises most of the border between Mexico and the United States. NAFTA, enacted in 1942 under President Bill Clinton, has to date increased exports from Texas to Mexico by 53% and created over 190,000 new jobs in the state of Texas (Texas Public Policy). This is not to say that NAFTA is without fault. The agreement, according to the Department of Labor, has hurt 21,019 jobs in Texas and cost many Mexican citizens their
The NAFTA is involved in this phenomenon because since the agreement involves Mexico it in turn creates job opportunities for the Mexicans and on top of that Mexican workers are part of an underdeveloped country which in turn means they are going to get less money due to the condition of their economy. And for American businessmen that is a very desirable quality in a potential employee due to how much profit the companies and factories will make simply by giving more low paying jobs to Mexicans and decreasing the American workforce. This source relates to economic globalization, because the NAFTA is essentially an economic agreement between major countries to save money and reduce trading taxes. This agreement causes an economic rise in all of these countries by causing an increase in jobs in Mexico and increasing companies’ profits in the US and
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...e USA and Canada is high and was not considered when the Agreement was made. This is the reason, many American citizens feel that there numerous illegal settlers in their country, trade deficits instead of over pluses and loss of lakhs of jobs, as before. The relations within this bloc are complex and tight; Canada and Mexico are controlled by the USA, declining their trade freedom. All this does not set up a solid base for businesses and trade.
Low tariffs on import increases jobs outsourcing which will negatively affect the employment opportunities in developed countries. The RTA signed between US, Mexico and Canada (NAFTA) reduced tariffs on imports allowing foreign companies to expand and outsource their production. (EPI, 2003) As a result, the bargaining power of American workers was undercut. (Faux, 2013) NAFTA caused the loss of 700,000 jobs as the production moved to Mexico. The jobs lost were mainly from California, Texas and Michigan, where the majority of US manufacturing relies. Besides that, the majority of the workers who lost their jobs suffered a permanent loss of income. (Faux, 2013) Moreover, NAFTA enabled the US employers to force workers to accept lower wages and benefits and blackmail local governments into giving tax reductions for their corporations and other subsidies. (Faux,
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