...Are you for or against free trade? Are you for or against NAFTA? What is the economic basis for trade? Explain the underlying facts that support free trade and give an example of a good that you purchased recently that is based on resource differences. What are some examples of goods that the U.S. has comparative advantage in producing? Take a look at the tag of the shirt/dress/pants you are wearing today. Where was it made? Anyone wearing “Made in America” items of clothing today? We sometimes hear people say “Buy American." Why don't we? What is the basis of international trade? What are the benefits and the costs? Under what conditions would you advocate for trade restrictions? There are many benefits of free trade. One is the theory of comparative advantage, as many of my fellow students eloquently described. According to McConnell, Brue, & Flynn, free trade promotes economic growth by allowing countries to specialize so that different types of output can be produced in the countries where they can be made most efficiently (2012). Free trade creates a global open market for the consumers to vote with their dollar which country is producing a particular good most efficiently thereby reducing the overall price. Competition creates a superior good at a cheaper price, a global market is the ultimate in competition. Reducing Tariff barriers leads to trade creation, According to Pettinger, “Trade creation occurs when consumption switches from high cost producers to low cost...
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...NAFTA (North American Free Trade Agreement) and Its Advantages in Mexico Regional Integration is described as a process in which states enter into a regional agreement in order to enhance regional cooperation through regional institutions and rules. North American Free Trade Agreement was the removal of barriers between Mexico and the United States. It was the phasing out of virtually all restrictions on trade and investment flows. “The expanded trade resulting from NAFTA has raised the United States' gross domestic product very slightly. (The effect on Mexican GDP has also been positive and probably similar in magnitude. Because the Mexican economy is much smaller than the U.S. economy, however, that effect represents a much larger percentage increase for the Mexican economy.)” (The Effects of NAFTA on U.S. –Mexican Trade and GDP, May 2003). Over the years NAFTA has helped Mexico to improve on their exports and imports trading with the United States. NAFTA has had a positive effect dealing with the international investments. This is because some of the restrictions Mexico had on their foreign investment dealing with the ownership of capital. NAFTA also allowed Mexico to do away with tariffs and quotas. This allowed Mexico to become a profitable place to invest, in plants and assembling of products in the United States. NAFTA eliminating the tariffs in Mexico helped to reduce the different license requirements and restrictions on foreign investment. This meant that it would...
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...NAFTA Assignment Benefits of NAFTA NAFTA is a highly controversial free trade agreement between the countries of Canada, Mexico and the USA. I believe it has more benefits than drawbacks as it has quadrupled trade, lowered prices, increased economic growth and created jobs. Trade The trade between the three countries quadrupled, from $297 billion to $1.14 trillion (Advantages of NAFTA). Which in turn boosted economic growth, profits, and jobs. As well it lowered prices for consumers. A huge reason for the boost in trade between them is because with trade you do away with tariffs that you would usually encounter with other countries. With the cost of trade lowered it was a huge help to small businesses and business owners, now they had a better chance at expanding their businesses. Imports and Exports With lower tariffs the price of imports grew less and less. This is a huge factor for oil prices since instead of getting oil from the Middle East it could be imported from Mexico or the USA. Not only oil had a huge decrease in price and how much could be imported but fresh fruit, which is usually quite expensive, dropped in value and rose in imports. Natural Resources...
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...North American Free Trade Agreement and American Job Loss William Gregg Liberty University Abstract America’s promises of increased jobs and exports is waning after the inception of the North American Free Trade Agreement (NAFTA), ratified in 1994 (Kubasek, Brennan, & Browne, 2015). Many prominent economists and U.S. government officials convinced the American people to support NAFTA by predicting an abundance of growing trade surpluses with Mexico, and the creation of hundreds of thousands of jobs. Now, twenty years later, Americans view NAFTA as a symbol of job loss, and huge lingering trade deficits. Many proponents are touting this agreement between the United States, Mexico, and Canada as having resounding success. However, a significant number of NAFTA opponents interpret the results as being devastating to the U.S. economy. It is important for American citizens to understand the overall effects of this pact creating the world’s largest free trade area after its initiation twenty years ago. North American Free Trade Agreement and American Job Loss The goal of NAFTA is to eliminate trade barriers between the U.S., Canada, and, Mexico (Kubasek et al., 2015). Since the implementation of NAFTA in 1994 (Kubasek et al., 2015), these roadblocks have been either immediately removed or were eliminated over longer periods, ranging from five to fifteen years (International Economics). The volume of trade between the three countries has soared to $1.2 trillion as...
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...Introduction: SAARC, NAFTA and EU are the three regional organizations situated in three different continents Asia, North America and Europe respectively. Among them EU is well establish governance system with a unique parliament comprise by the member state. SAARC and NAFTA are not having a governance system compare to EU. In the economic perspective NAFTA is the largest trade bloc in the world in terms purchasing power parity. EU is holding the second positive and SAARC is comparative weak in all aspect than the two. South Asian Association for Regional Cooperation (SAARC): The South Asian Association for Regional Cooperation (SAARC) is an economic and geopolitical organization of eight South Asian nations. Ex-president of Bangladesh, Ziaur Rahman was the one who made a formal proposal on May 2, 1980. The first SAARC summit was held in Dhaka on 8 December 1985, when the organization was established. Afghanistan is the only new inclusion that happened since SAARC was established. Every decision SAARC takes and every policy it frames is guided by the overall objectives it had set for itself in the charter. Although promoting “welfare economics” and “collective self-reliance” among the South Asian nations are the commonly quoted objectives, yet there are some equally important focus areas which need a mention. “Accelerating economic growth” and cultural development in South Asia is one of the priorities, which come under the broader goal of improving quality of life. Ref: Francesco...
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...the nature of NAFTA and its effect on regional integration as well as state economies from several perspectives. In 1993, the United States, Canada and Mexico signed the North American Free Trade Agreement to achieve the higher level of regional integration. This NAFTA not only concerns the removal of trade barriers, but also aims to promote the movement of capital. Firstly, this essay will explain the evolution of NAFTA and its successful influence on economic integration. Furthermore, this chapter will provide the criticism on the influence of NAFTA. Secondly, this study will discuss the impact of NAFTA on regional integration, particularly economic integration. Then, this essay will propose the understandings on the effect of NAFTA on members’ economies and businesses from four perspectives, including trade, economic growth, employment and FDI. Main body The Evolution of NAFTA The North American Free Trade Agreement (NAFTA) issued in 1993 aims to removal trade barriers and liberalise economics and business among the United States, Canada and Mexico. Compared with similar FTA economic relationship, such as EU, NAFTA is described as the most implemented FTA (Orme, 1996). Like most FTAs, NAFTA not only effectively coordinates resource and improves competitiveness of countries and corporates, but also promotes the movement of products, services and investment, even financial integration. For instance, Krugman & Hanson (1993) stress that the implementation of NAFTA can facilitate...
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...DRAFT The purpose of this research paper is to define NAFTA and the purpose of the Free Trade Agreements. It will also discuss some of the rules, customs procedures, how to settle disputes between the countries and how NAFTA works overall. NAFTA is a regulation implemented on Jan. 1, 1994, that reduced and eventually abolished tariffs to encourage economic activity between the United States, Canada and Mexico. NAFTA has been given credit with making it easier for Americans to purchase Canadian and Mexican goods, which stimulated a small increase in wages in all three countries, and increased manufacturing and other jobs for U.S. workers. The agreement also radically increased trade between the three nations, from $337 billion in 1993 to $1.182 trillion in 2011(Investopedia). The North American Free Trade Agreement (NAFTA) revolutionized trade and investment in North America, helping to unlock our region’s economic potential. Since it came into effect 15 years ago, North Americans have enjoyed an overall extended period of strong economic growth and rising prosperity. NAFTA has helped to stimulate economic growth and create higher-paying jobs across North America. It has also paved the way for greater market competition and enhanced choice and purchasing power for North American consumers, families, farmers, and businesses. Furthermore, NAFTA has provided North American businesses with better access to materials, technologies, investment capital, and talent available across...
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...American Free Trade Agreement The North American Free Trade Agreement (NAFTA) is a regulation that sets the rules of trade between the United States, Canada, and Mexico. The purpose of this comprehensive agreement is to diminish trading costs, encourage economic activity and help North America stay competitive in the international marketplace. NAFTA came into affect on January 1st 1994 creating one of the largest free trade zones in the world. NAFTA grants the most favored nation status to all three countries, meaning that all nations have to be given equal treatment. Since the enactment of NAFTA the North American economy has grown more then twice its size. After NAFTAs implementation most tariffs were removed within North America and all others were phased out over the next 15 years. As of January 1st 2008 the arrangement had diminished all remaining tariffs and barriers to investment between the NAFTA countries. The trade agreement is overseen by several commissions; including the free trade commission, NAFTA coordinators, NAFTA working groups and committees, NAFTA secretariat, commission for labor cooperation, and the commission for environmental cooperation. Even though NAFTA has created an environment of confidence and stability required for long-term investment the agreement is still seen as controversial. For examples the United States lost factory jobs to lower cost Mexican manufacturing and it lowered the wages for the remaining factory workers. NAFTA has also not...
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...In analyzing the free trade market there have been several agreements that have been put in place to ensure that there is fair trading among countries. This is necessary in order to ensure that there is a balance between the supply and demand in all markets. It would not be fair for the countries that are powerful on an economic and political level to dominate the market, which would impact the countries that poorer than others. There is constant talks and meetings about free trade agreements in several markets and free trade zone. Most countries are tying to facilitate free trade on a international level, which is never a easy task because there are so many facets of the agreements that have to be addressed. There are many theories that exist that make the thought process simple of implementing free trade agreements but when you think about the principles and how it will affect society, the environment and multiple societies around the world. By encouraging free trade this is the first step towards positive development for all countries. Since the FTA was put in placed there has been a balance, which has curved unethical and illegal practices. It is very important to foster the right relationship between countries, to ensure not only economic growth and national security among foreign countries and trading. Free trade areas (FTA) are agreements where two or more countries eliminate trade barriers and tariffs between goods traded amongst the countries. Started after the end...
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...NAFTA During this program, I have learned a lot more about NAFTA. I had little knowledge of this multinational agreement before the course. Now I’m amazed to see ; How affective NAFTA is. NAFTA has demonstrated how free trade increases wealth and competitiveness, delivering real benefits to families, farmers, workers, manufacturers, and consumers. The NAFTA partners have created this website to provide Canadians, Americans, and Mexicans with information about how NAFTA works and the many ways in which it has improved the lives of North Americans. Since NAFTA came into effect, trade and investment levels in North America have increased, bringing strong economic growth, job creation, and better prices and selection in consumer goods. North American businesses, consumers, families, workers, and farmers have all benefited. NAFTA FOR BUSINESS NAFTA provides North American businesses with better access to materials, technologies, investment capital, and talent available across North America. Canada’s NAFTA exports have likewise grown substantially, and have been particularly successful in high value added sectors such as automotive equipment (trucks, cars and parts), machinery and parts and industrial goods. In 1998, the growth alone in Canada’s exports to our NAFTA markets was roughly equal to the total value of our exports to Japan and to the 15 nations of the European Union (EU) combined. The growth in our NAFTA exports last year also more than offset the drop in exports to other...
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...American Economic Integration: NAFTA and Beyond Dr. Igor M. Paramonov, Southern Alberta Institute of Technology, Calgary, AB, Canada ABSTRACT This paper examines various possibilities for future economic integration within and beyond the North American Free Trade Agreement (NAFTA). Previous publications have suggested three potential trajectories including development within the envisioned original structure, deepening, and widening of NAFTA (Clement et al, 1999). It is necessary to revisit these directions while summarizing major developments and new perspectives. Vision and hard work are required for NAFTA to remain one of the most economically competitive regional trading arrangements in the world. In addition to NAFTA, each member nation has pursued its own plans to integrate with countries and regions beyond North America. The most recent developments involve trade negotiations between Canada and the European Union, as well as both Canada and Mexico’s considerations to join the nine countries of the Trans-Pacific Partnership Pact. The United States cooperates with a group of smaller developing economies within the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR). This paper presents ongoing analysis of governmental, academic, and other sources for the purpose of teaching in the field of international business, including the uncommon course of “Business under NAFTA.” INTRODUCTION Is the “Age of NAFTA” over? This is a legitimate...
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...20 years of NAFTA – trends in trade and the economic effects «20 years of NAFTA – trends in trade and the economic effects» by Paweł Kowalik Source: Economics of the 21st Century (Ekonomia XXI Wieku), issue: 4 (4) / 2014, pages: 4663, on www.ceeol.com. The following ad supports maintaining our C.E.E.O.L. service Access via CEEOL NL Germany EKONOMIA XXI WIEKU ECONOMICS OF THE 21ST CENTURY 4(4) • 2014 ISSN 2353-8929 Paweł Kowalik Wrocław University of Economics e-mail: pawel.kowalik@ue.wroc.pl 20 YEARS OF NAFTA – TRENDS IN TRADE AND THE ECONOMIC EFFECTS Summary: This year marks the twentieth anniversary of the largest economic grouping in history, both in terms of surface area and the generated GDP – the North American Free Trade Agreement – NAFTA. The grouping was established on 1 January 1994, with the objective of gradually doing away with the existing tariff and non-tariff barriers to trade between the United States, Canada, and Mexico. Its objectives and effects have long been under careful examination and subject to many analyses. Prognoses varied, from potentially significant benefits to anticipated losses, particularly for US economy. The paper is an attempt at presenting the twenty years of NAFTA operation, predominantly from the viewpoint of its impact on the trilateral trade exchange, unemployment, inflation, and the Gross Domestic Product (GDP) of its member states. The analyses suggest that NAFTA has proved its effectiveness...
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...Faculty of Management Studies (MSU) Assignment on NAFTA (Subject : International Marketing) 1 Assignment on NAFTA Sub: International Marketing Submitted by: Submitted to: Rajesh Madnani Roll No. 9 5th Semester MBA – Evening (XVIIIth Batch) Mr. Seshan Iyer FACULTY OF MANAGEMENT STUDIES THE M.S.UNIVERSITY OF BARODA Submitted by Rajesh Madnani (Roll No.9) Submitted to Mr. Seshan Iyer Faculty of Management Studies (MSU) Assignment on NAFTA (Subject : International Marketing) 2 What is NAFTA North American Free Trade Agreement (NAFTA) is an agreement made between the governments of Mexico, Canada and the United States for the purpose of eliminating trade barriers among them. Important Documents: - North American Free Trade Agreement (with preamble, 22 chapters, 7 annexes, and articles) -procedural forms NAFTA has two supplements: the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC). Following diplomatic negotiations dating back to 1990 among the three nations, U.S. President George H. W. Bush, Canadian Prime Minister Brian Mulroney and Mexican President Carlos Salinas, each responsible for spearheading and promoting the agreement, ceremonially signed the agreement in their respective capitals on December 17, 1992.[5] The signed agreement then needed to be ratified by each nation's legislative or parliamentary branch. The agreement was then given to each country’s legislative in order to make changes...
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...In January 1994, the United States, Mexico, and Canada implemented the North American Free Trade Agreement (NAFTA), forming the largest free trade zone in the world. The goal of NAFTA is to create better trading conditions through tariff reduction, removal of investment barriers, and improvement of intellectual property protection. NAFTA continues to gradually reduce tariffs on set dates and aims to eliminate all tariffs by the year 2004. Before NAFTA was established, investing in Mexico was a difficult process. Investors needed the Mexican Government's approval and were also required to meet specific investment guidelines. These requirements necessitated investors to export a set level of goods and services, utilize domestic goods and services, and transfer technology to competitors. Under NAFTA, investors no longer need government approval to invest and are treated as domestic investors. NAFTA has also increased intellectual property rights and allowed companies to obtain patents in Mexico and Canada. In the past, companies were hesitant to export research and development intensive goods; with increased intellectual property protection, however, exports of these goods have shown a definite increase. As a result of better trading conditions, exports and imports of most other goods have increased along with the research and development intensive goods. In Mexico, the elimination of investment barriers has allowed investment to expand. Increased trading and investment has then...
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...Since the automotive industry constitutes more than 40% of North American trade, NAFTA saves the automotive industry immense amounts of money. The North America Free Trade Agreement is a trilateral agreement that encourages free trade between Mexico, Canada, and United States. The NAFTA agreement has affected the automotive industry by increasing the amount of U.S. automotive imports. It has also increased the amount of U.S. automotive exports to NAFTA partners and it has caused outsourcing in the automotive industry. The North American Free Trade Agreement came into effect on January 1, 1994. The president of Mexico, Carlos Salinas de Gortari, the prime minister of Canada, Brian Mulroney, and the president of the U.S., George H. W. Bush, signed NAFTA in 1992, which then required the legislatures of the three countries to approve it before it went into effect. After the legislatures passed the NAFTA agreement, it became in effect on January 1, 1994. Under NAFTA, the partnering countries agreed to eliminate and reduce most barriers to trade freely between the countries. Most of the United States automotive trade is done with Mexico. This is because the United States and Canada were already highly integrated following the U.S.-Canada Free Trade Agreement and a U.S.-Canada Auto Pact in 1965. Before the NAFTA agreement, Mexico had strict automotive decrees on foreign automotive production in Mexico. After NAFTA was signed, those strict rules went away. Mexican tariffs on all types...
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