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Why do you think it is good to trade with other countries?
What are some of the difficulties countries might face as they trade with one another?

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I am learning about NAFTA.
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This means that I will be able to identify patterns of trade between places based on resources.

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Tariff- Taxes on items traded

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In the 1940s, in the post-war period, was a boom for trade and rising globalization. It urged several previously stagnant countries into trading with other countries.
In the past, trading was a way for most countries to gain access to resources not available to them.
Though, several resource-rich countries have more complex economic agenda when it comes to trade.
Those countries take advantage by imposing very high tariffs on trade in goods. No one can complain because of the absence of trade standards and a governing authority for trade.

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By 1944 and the years to come, many initiatives to create a governing body for global trade have been done.

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WTO came into force on January 1, 1995, with the 75 existing GATT members and other
European communities acting as the founding countries. The organization now has 153 members, representing more than 95% of total world trade.

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NAFTA, the North American Free Trade
Agreement, was signed by the United States,
Canada, and Mexico.
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NAFTA was signed in 1993 and went into effect on January 1, 1994

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NAFTA was written to create a Free Trade
Area in North America
◦ “Free Trade” means that counties may freely trade goods with each other without having to pay a tariff
(tax) on those goods,.
◦ In other words, “Free Trade” means no trade barriers

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The purpose of the agreement is to:
◦ Allow free movement of goods and services among the countries
◦ Promote competition in the free trade areas
◦ Protect the property rights of people and businesses in each country
◦ Be able to resolve problems that arise among the countries
◦ Encourage cooperation among countries

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Most economists agree that the agreement has been good for the countries involved.

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Free trade increases sales and profits for Mexico,
Canada, and the U.S.A., thus strengthening their economies
Lack of tariffs has allowed Mexico to sell its goods in the USA and Canada at lower prices.
This makes Mexico products more competitive in these markets and increases Mexico's profits as it tries to develop its economy.
Free trade is an opportunity for the U.S. to provide financial help to Mexico by making jobs available in factories located there.

A.
B.
C.
D.
“NAFTA Members
Prepare for
Picnic!”
“NAFTA Members
Graciously Share
Business
Ventures!”
“NAFTA Members
Cover Up
Conspiracy!”
“”NAFTA
Members VIE for
Business!”

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Free trade has caused more U.S. jobs losses than gains, especially for higher wage jobs
◦ Factories, called Maquiladoras, are built on the
Mexican border and workers are hired there to make goods at a much lower wage than workers would be paid in the U.S.A

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Minimum Wage
◦ Mexico- $3.40 per day vs U.S. $7.25 per hour
Example: Hourly compensation costs for production workers in manufacturing
Mexico- $1.21 vs U.S. 17.70

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These factories make many types of Products:

• 3 Day Blinds
• 20th Century Plastics
• Acer Peripherals
• Bali Company, Inc.
• Bayer Corp./Medsep
• BMW
• Canon Business Machines
• Casio Manufacturing
• Chrysler
• Daewoo
• Eastman Kodak/Verbatim
• Eberhard-Faber
• Eli Lilly Corporation
• Ericsson
• Fisher Price
• Ford
• Foster Grant Corporation
• General Electric Company
• JVC
• GM
• Hasbro
• Hewlett Packard
• Hitachi Home Electronics
• Honda
• Honeywell, Inc.
• Hughes Aircraft
• Hyundai Precision America
• IBM
• Matsushita
• Mattel
• Maxell Corporation
• Mercedes Benz
• Mitsubishi Electronics Corp.
• Motorola
• Nissan
• Philips
• Pioneer Speakers
• Samsonite Corporation
• Samsung
• Sanyo North America
• Sony Electronics
• Tiffany
• Toshiba
• VW
• Xerox
• Zenith

United State
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They can move their factories to
Mexico and ship the goods to the US with no tariffs
They would not have to pay the workers in Mexico as much as much as in the U.S
They would be able to sell their products for cheaper, but still make a good profit.
Many American factory workers lose their jobs because the owners move the factories to Mexico. American factory workers cannot move to
Mexico to keep their job.
Goods made in Mexico would cost a lot less because labor is cheaper there.
Mexico
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They would not like foreign owned factories because they would create competition and hurt Mexican owned businesses
Maquiladoras would provide jobs for
Mexicans, but the profit made by
Maquiladoras would go back into the
US economy, not into Mexico’s
It would provide a job in a country where there are not enough jobs
However, the wages are very low and the working conditions are not good
Building factories creates pollution.
An environmentalist would want to make sure that Mexico had laws to protect the environment.

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In your own opinion, do you think NAFTA is good or bad? Compose a piece that explains what your opinion is and support with details from your notes.