North American Free Trade Agreement (NAFTA) is a free trade agreement between Canada, the United States and Mexico that was signed in 1994 and included a labour side agreement, the North American Agreement on Labor Cooperation (Hebdon, R., & Brown, T. Industrial Relations in Canada,2016).
In 24 years, NAFTA has brought tremendous effect to North American. As Donald Trump became the U.S. President, who repeatedly attracted NAFTA during his campaign, and two days after his inauguration, he promised to begin renegotiation the agreement. It is a good opportunity to discuss about the effect on union power of the NAFTA.
Product Market
According to the Marshall’s conditions theory, NAFTA emerged the product market of U.S., Canada, and Mexico the three
…show more content…
The firm that can easily substitute other factors of production for labour will possess more bargaining power. Using United Automobile Workers (UAW) as example, because the large auto manufacturing companies such as General Motors, Ford, and Chrysler adopted more and more automation on assembling line, the most of assembling workers has been replaced. However, the major members of UAW were these assembling workers. The UAW is only about one-half the size it was two decades ago. Also, NAFTA enlarge the substitution effect by allowing freely using technology in North American wild. Therefore, in generally speaking, the substitution effect decreases union …show more content…
Still using auto industry as an example, the auto manufacturing industry is considered to be highly capital and labor intensive. While machines and robots are playing a greater role in manufacturing vehicles, there are still substantial labor costs in assembling and engineering automobiles. From the aspect of effect on union power of the North American Free Trade Agreement (NAFTA), the effects are different from countries to countries. "Unions like the UAW, like the steelworkers, like the Teamsters, were really undermined in our collective bargaining power by NAFTA," Robert Thompson, the former UAW president says. "Because now, we go in and we bargain with car parts supplier companies and they say, 'Well, we can go to Mexico and make this cheaper.'”. Therefore, we can say the Unions have less power by the effects of
Trade is the most common form of transferring ownership of a product. The concepts are very simple, I give you something (a good or service) and you give me something (a good or service) in return, everyone is happy. However, trade is not limited to two individuals. There are trades that happen outside national borders and we refer to that as international trading. Before a country does international trading, they do research to understand the opportunity costs and marginal costs of their production versus another countries production. Doing this we can increase profit, decrease costs and improve overall trade efficiency. Currently, there are negotiations going on between 11 countries about making a trade agreement called the Trans-Pacific
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.
As companies look to expand operations and hire new employees, many economic and environmental factors are taken into consideration. The cost of labor is one of the primary concerns as labor generally constitutes a large part of company budgets. The organization of labor by unions further increases this concern. The wages of unionized workers are significantly higher than the wages of nonunion workers in almost every industry (Fossum, 2012). Higher wages generally result in reduced company profits, lower share prices, and reduced shareholder returns (Fossum, 2012). Unionization also reduces the employer’s flexibility with regards to hiring, transferring, or promoting employees (Fossum, 2012). Productivity may be negatively impacted by unionization because merit is often eliminated as a criterion for wage increases or promotions (Fossum, 2012). As a result of these negative impacts, employers are motivated to oppose unionization.
"North American Free Trade Agreement (NAFTA)." Encyclopædia Britannica. Encyclopædia Britannica Online. Encyclopædia Britannica Inc., 2011. Web. 23 Nov. 2011. .
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)
The United States is Canada's largest trading partner and is the largest market for Canadian goods. The Canada-U.S. Free Trade Agreement (1989) and the North American Free Trade Agreement (1994) have both been crucial to increasing market opportunities for Canadian exporters in the U.S.
The North American Free Trade Agreement—NAFTA—was an important agreement signed between three countries—the U.S., Mexico and Canada. NAFTA played an important role between each of these countries’ relations with one another through imports and exports. Throughout the presidential elections throughout the years, NAFTA has been highly debated on whether or not it has helped benefit the economy of these countries or if it has caused a lot detrimental issues. NAFTA promised many benefits for these countries, but not all of their promises were carried through; many views across the political spectrum also have their indifferences about NAFTA.
Throughout history, the United States has initiated policies, peace agreements, or laws which were believed to bring prosperity, and success, however those policies as a result were created in the U.S. best self-interest. One of these policies is known as NAFTA, which was a trade agreement created to open up free trade around the globe, however this policy backfired, deeply scaring and deteriorating the Latin American economy, and its people. Specifically, NAFTA known as the North American Free Trade Agreement, took effect on January 1, 1994 was a treaty which entered by the United States, Canada, and Mexico used to eliminate tariff barriers, in order to encourage economic prosperity between these three countries. A quarter century later, the
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...
NAFTA's promoters promised 200,000 new jobs per year for the U.S., higher wages in Mexico and a growing U.S. trade surplus with Mexico, environmental clean-up and improved health along the border. The reality of the post-NAFTA surge in imports from Mexico has resulted in an $14.7 billion trade deficit with Mexico for 1998. By adding the Mexican trade deficit to the deficit with Canada, the overall U.S. NAFTA trade deficit for the year 1998 is $33.2 billion dollars. In the last five years we have gone from a pre-NAFTA trade surplus of $4.6 billion with Mexico to a $14.7 billion deficit. Using the Department of Commerce trade data in the formula used by NAFTA proponents to predict job gains, the real accumulated NAFTA trade deficit would translate into over four hundred thousand U.S. jobs lost.
The last bolt is screwed on as a relieved automotive worker marvels at his wondrous creation: a car. With the roar of an engine, the car slowly disappears into the distance. The worker gradually turns around, picks up his tools, and continues to work on a new car. As a consumer, we rarely wonder how things are made; we simply take everything we own for granted. For once, have you wondered how many hours of hard labor many automotive workers must go through? The automotive industry has been around for many years, but it has not always been as efficient as it currently is. As the industry continues to evolve, many new innovative ideas are still being developed. In the past, automotive workers have had to work in harsh conditions without much security or job benefits. Nevertheless, through the continuous development of organized collective bargaining, workers are being treated as they should be. Being the largest automobile manufacturer in the world, General Motors Corporation has been greatly affected by the needs of their workers. Rick Wagoner, CEO of General Motors, is currently in charge of “running the show” at GM. Being the most successful automotive company since 1931, it is obvious that he not only has to satisfy customers, but also the workers within the company. From the smallest things such as a work raise to bigger things such as the working condition, the management of General Motors has been pressured to make both positive and negative changes to the way the company is run as a whole in order to satisfy the workers who are part of the UAW Union. Therefore, the formation and development of unions encompasses both pros and cons.
Labor Unions have had an effect of American history as well as world-wide history from the time they became popular. Following WWII Americans were predominantly pro-labor, however, as time went on union’s credibility fell short of perfect. Union strikes proved to be bothersome to both the general public and company. Unions were also suppressing to employees through fraud and lack of worker rights (in earlier years, before Acts were passed). Although Union labor had its shortcomings, this type of labor is noted to be the most productive and economically beneficial. With both sides shown, I feel Unions will again thrive in the future with a few key adjustments made.
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
Roger & Me shows that GM's board of directors used company profits not to create new jobs, but to buy already existing assets, such as data processing companies (EDS) and weapons manufacturers (Hughes Aircraft) at inflated prices, and to automate their current assembly lines, and build new plants in Mexico and in Asia -- destroying jobs in the United States in the process. In Mexico, GM pays the worker only $.70 an hour, as opposed to at least minimum wage in the United States of America.... ... middle of paper ... ... This man is also upset because the point of unions is to increase the workers strength in bargaining with employers.
Globalization has become one of the most influential forces in the twentieth century. International integration of world views, products, trade and ideas has caused a variety of states to blur the lines of their borders and be open to an international perspective. The merger of the Europeans Union, the ASEAN group in the Pacific and NAFTA in North America is reflective of the notion of globalized trade. The North American Free Trade Agreement was the largest free trade zone in the world at its conception and set an example for the future of liberalized trade. The North American Free Trade Agreement is coming into it's twentieth anniversary on January 1st, 2014. 1 NAFTA not only sought to enhance the trade of goods and services across the borders of Canada, US and Mexico but it fostered shared interest in investment, transportation, communication, border relations, as well as environmental and labour issues. The North American Free Trade Agreement was groundbreaking because it included Mexico in the arrangement.2 Mexico was a much poorer, culturally different and protective country in comparison to the likes of Canada and the United States. Many members of the U.S Congress were against the agreement because they did not want to enter into an agreement with a country that had an authoritarian regime, human rights violations and a flawed electoral system.3 Both Canadians and Americans alike, feared that Mexico's lower wages and lax human rights laws would generate massive job losses in their respected economies. Issues of sovereignty came into play throughout discussions of the North American Free Trade Agreement in Canada. Many found issue with the fact that bureaucrats and politicians from alien countries would be making deci...