More international companies are investing in Canada. The stock of foreign direct investment (FDI) in Canada has increased steadily over the past five years to reach over $130 billion last year. Investor confidence is high. International companies are discovering what firms in the United States have known for decades: it pays to invest in Canada. There is a government commitment to attract foreign direct investment.
If NAFTA made this agreement, people would be able to move about Canada, the United States, and Mexico with ease. The unskilled workers in Mexico would migrate to "El Norte," looking for higher paying jobs. The supply of workers in Mexico will drastically decrease. Only the terminally ignorant, or those with families in Mexico, would stay in a poor country and earn low wages. On the other hand, the United States' supply of workers will increase drastically.
In 1994, the most controversial alliance between nations took its affect. NAFTA (North American Free Trade Agreement) was the agreement to have free trade between Canada, United States and Mexico. According to the Institute for International Economics one million workers in 1995 would owe their jobs to U.S. exports to Mexico. Some 175,000 of those would be new jobs in higher paying sectors (Mohn 2007). Although it was suppose to drastically increase trade and create jobs, in many ways had the reverse affect.
The Problems with NAFTA Not Helping Economies "The free trade argument states that, if each nation produces what it does best and permits trade, over the long run all will enjoy lower prices and higher levels of output, income, and consumption that could be achieved in isolation." The North American Free Trade Agreement (NAFTA), started in January of 1994, created a situation in North America in which there are no taxes on most products imported and exported between the three countries. Ideally, the governments of Canada, the U.S. and Mexico believed that breaking the trading barriers would increase jobs and other things as it improved each of their economies. NAFTA, however, has not necessarily helped the economies in the way in which the governments had projected. There was much speculation before the signing of the treaty that NAFTA would not work out the way it was projected to.
However, the challenge with the U.S Mexico agreement was that the U.S had violated their end of the bargain by using bigger and heavier trucks against the restrictions imposed by the Mexican Government. In addition to this, NAFTA had expanded the program of Maquiladora where companies owned by the United States hired Mexicans near the border to assemble products at low wages in order to be exported to the United States. This boosted their workforce although they did not have any labor rights and health protections (Hymson et, al. 230).
The main reason is poverty in their countries of origin, which can include the amount of money people can make in those countries. The way of life or lack of ability to support families has caused people to come to America for a better future. The people of Mexico are a prime example of those who want a better life for their families. Out of about 100 million people in Mexico there are 48.9 million living in patrimonial poverty, meaning that the per capita income of this population is less than what is needed to pay for food, clothing, footwear, housing, healthcare, public transportation, and education. In 2006 it was reported that 14 million lived in extreme poverty (BBC, 2008).
While Bernie Sanders disagrees with American outsourcing, I cannot. Sanders’ argument focuses generally on American jobs, claiming that “We have been losing millions of jobs as a direct result of our disastrous trade policies … We must do everything possible to stop companies from outsourcing jobs” (44). While perhaps low-skill manufacturing jobs are gone, macroeconomics proves that the increased economic efficiency outweighs the initial unemployment. The outsourcing of low-skill labor allows national economic focus on high skill labor outputs. This situation allows the for price of exports to go up and keeps the costs of imports low - a favorable condition for the growth of Gross Domestic Product (GDP).
This day in age everyone has low rates ,cash rebates but now employee discount, good thing GM was the leader of the pack. The financial outlook for present GM is superb and the employee discount drastically sparked sales for a temporary time period. The reason GM had to run an incentive program was the cause of abundance of Inventory and employees are too expensive to maintain. (Pension, benefits…..) Gm had an increase in finished product, service parts, etc… between 2003 and 2004 in other words, total inventories increased by nearly one million dollars, as sales decreased during that time period. GM has also seen a rise in healthcare and other benefits in the United States.
An estimated 8.4 million jobs were lost between the beginning of 2008 and the end of 2009. It stands to reason that if we bought more domestic products, our economy would grow and we could create jobs. Furthermore, if we bought more of our own goods, we could save failing sectors such as automobile manufacturing. This industry employs hundreds of thousands of people, many of whom have become highly specialized workers. This is an enormous investment in human capital that would simply be wasted if they were forced to learn new skills.
A couple of countries decided to fall back on restrictions on their inter-trades and it also allowed companies to accomplish economies of scales by setting up a bigger market. With ore output, the products are cheaper resulting in economies of scales. There were also free trade agreements with Mexico, Canada, and the United States in the North American Free Trade Agreement. They wanted to make the Free Trade Area of the Americas but some Latin American countries didn’t want to individually talk with the US. They wanted to talk as a united front.