...NAFTA is a short form of North America Free Trade Agreement. It’s an economic agreement between the United States, Canada and Mexico. NAFTA also beget one of the world’s biggest free trade areas by bringing together two of the world’s richest countries; United States and Canada and Mexico which is a less developed country. Its main aim was to lower the costs which are incurred during trading, also to make an increase of investments in the business and to assist the North America to be very competitive in market. NAFTA was also made to eliminate some of the barriers that are put in place to the manufacturing, to the agricultural and to the services (Buono, 2013). Also, was to remove various restrictions that are put in place in investment and...
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...Pros and Cons of Nafta After 20 Years Oscar Eduardo Parra Díaz 23/10/2014 INTRODUCTION: Through this document, we will review how NAFTA have been improving the economy of the countries involved after 20 years. We are going to see how well it has been for them and how it has been affecting positively and negatively the commerce between the countries and others. Mexico is maybe the country with more dependence to this treaty because of the imports and exports that every day are involved between Mexico, USA and Canada. This dependence is more to the commerce with the USA and that could be considered as a problem to Mexico. DEVELOPMENT As said before, Mexico’s economy is based on the commerce that involves imports and exports with the United States. To Mexico, this represents 80% of commercial activity even knowing that they have 10 more treaties with other nations. Obviously this is not good for them because depending on how well is the economy of United States behaving is how well are going to be the incomes to Mexico because of the sells to them. This treaty have been improving and helping the growing of the 3 nations involved. As a matter of fact just a few years ago Mexico was considered to the United States their principal commercial partner just before China started to grow as fast as they did. That’s an important thing to consider and Mexico need to realize that their opportunity to do business with USA is everyday much more difficult because of competitors. In order...
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...Pros Cons The most-direct economic benefits from international trade arise from the fact that countries are not all the same in their production capabilities. A business can take advantage of these differences in production capabilities Eg.Bananas & USA Japan – Beef On the other hand, it can mean more competition and less profits for the goods or services that a company sells. Imports Pros Cons Reduced prices Reduce demand for in-country products Less sales & profits Less jobs Another issue is the need for transportation. It cost money to transports goods and the price of transport can be unstable More choices Exports Pros Cons Excess prod can be used in the country This week – international laws that apply to trading Govt create trading policies that ensure greatest benefits for ppl & businesses of their countries How they do this? _ by creating rules/trade barriers for importing products Trade barriers are government-induced restrictions on international trade . it slows/prevents trade with another country Quotas - is a limit or control on the quantity/amount of products that can be imported (produced abroad and sold domestically) Tariff - A tariff is a tax on imports or exports (an international trade tariff) Subsidy is an assistance to a business or economic sector for producers Govt Action → Prod cost↓ = price of goods↓ Eg. subsidies to encourage the sale of exports; subsidies on some foods to keep down the cost of living, especially in...
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...are allowed. Consequently, the increased competition promotes greater efficiency within firms. (Curley, 2014) With some Trade blocs free trade is allowed within each country’s markets thereby encouraging each country to specialize in certain markets. (Economic Online, Unknown) In addition, jobs may be created because of the increased trade between members. (Economic Online, Unknown) And a final benefit is that firms inside the bloc are protected from cheaper imports from outside the blocs, such as the European Union show industry is protected from cheaper imports from China and Vietnam. (Economic Online, Unknown) On January 1, 1994, United States (US), Canada and Mexico entered into the North American Free Trade Agreement (NAFTA). (USTR, Unknown) One of the primary benefits is a decrease in tariffs. All three companies experienced wage increases and increased trade amongst the countries. (Fontinelle, 2012) Trade of goods and services between the U.S., Canada and...
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...Chapter Three The World Marketplace: Business without Borders Review Questions 1. What countries represent the largest global business opportunities for the next decade? What factors determine the size of the opportunity? China, India and Brazil are some of the largest growing global businesses. These comes from many different factors; GDP growth and population are two major causes. China has the largest populations in the world along with the fastest growing GDP percentages. Brazil’s population is not as large but does has a high GDP percentage, and also a high Dollar Pre Capital GDP. 2. Why do companies tend to thrive in global markets when their country of origin enjoys a comparative advantage in their industry? When their country of origin has naturally cheap raw materials or if their currency has been undervalued, they are naturally cheaper than their competitors from other countries. This gives them better margins and they thrive. 3. Explain how to calculate the balance of trade. How does the growing United States trade deficit impact the economy? Why? The money being spent to buy things from other countries is much larger than the amount of money where other countries are buying from the U.S. The deficit means we are buying more than we sell. To make up for the difference people and governments from other countries buy U.S. investments assets. 4. Explain the meaning of “strong”...
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...required from governments to receive loans. The policies were started to help countries become economically self-sufficient. This was to help ensure that that the loans would get repaid. SAPs encouraged governments to reduce spending on government programs, minimize the number of civil servants and by lowering taxes on already established private industries. _________________________________________________________________________ 8. The Incan Empire was principally in northern Mexico. True or False False 9-10. (2 points) Describe the pros and cons of NAFTA. NAFTA is a free trade agreement made between the United States, Canada and Mexico. This agreement would remove most barriers to free trade and investment by eliminating tariffs, establish clear trade rules, to improve working conditions and to develop and expand world trade. The pros are trade increases, consumer prices are lower and relations to these countries are stronger. The cons are displaced workers, lower salaries, environment problems and decreased government revenues....
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...Table of Contents Executive Summary 3 Issue Identification 4 Slowing Growth in NAFTA Trade 4 Continuation of NAFTA Strategy versus Expansion into Latin America 4 Taking Advantage of Economic Growth in Asia and Emerging Markets 4 Expanding Overseas 4 Environmental & Root Cause Analysis 5 Slowing Growth in NAFTA Trade 5 Continuation of NAFTA Strategy versus Expansion into Latin America 5 Taking Advantage of Economic Growth in Asia and Emerging Markets 5 Expanding Overseas 6 Alternatives and/or Options 6 Slowing Growth in NAFTA Trade 6 Continuation of NAFTA Strategy versus Expansion into Latin America 6 Taking Advantage of Economic Growth in Asia and Emerging Markets 7 Expanding Overseas 7 Recommendations and Implementation 7 Slowing Growth in NAFTA Trade 7 Continuation of NAFTA Strategy versus Expansion into Latin America 7 Taking Advantage of Economic Growth in Asia and Emerging Markets 8 Expanding Overseas 8 Monitor and Control 8 Executive Summary Since Canadian National Railway Company (CN)’s privatization by the Canadian government in November 1995, CN has not stopped growing its sales, profits, cash flow and, as a result, market value. Privatization and deregulation of the rail industry led to some of CN’s success, but CN had to cut costs and increase revenues. Cutting costs meant reducing workforce and closing or selling unprofitable tracks. It also meant investing in more efficient rail equipment and technology. Increasing revenues required focusing...
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...Slide 1: Title In January 1994 there was a new development; the North American Free Trade Agreement (NAFTA) was instituted between the United States, Mexico, and Canada creating the largest free trade area and richest market in the world. This one of the most important and wide-reaching treaties in the world. A treaty between Canada, Mexico, and the United States that was designed to foster greater trade between the three countries. It was one of interesting prospect and looked upon as the start of globalization. The attempt was to help with financial situations involving the all countries in the North American continent, especially those of United States, Mexico, and Canada. One major problem encountered were the economic stabilities of each country, especially in Mexico. There were issues of foreign debt, balance of payment problems, and exchange rate fluctuations. The agreement does well to commit to standards on environmental protection and labor laws but still strives to enforce those laws. The agreement did have some goals to help foster the partnerships between the countries. First and foremost to reduce trade barriers. These barriers cause imports to be of a higher priced than local goods. The object of the agreement was to participate in free" or "open" when goods and services can move into markets without restrictions, and prices are determined by supply and demand. Nations sometimes erect barriers to this free movement of goods and services, such...
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...Regional Integration for and Against Articles Introduction The North American Free Trade Agreement (NAFTA) is an agreement between the United States of America, Mexico and Canada. The agreement creates rules in the trade block and it was established in 1994. The goal of the agreement is remove or decrease the tariffs and non-tariffs barriers to stimulate trade. The NAFTA agreement included: * Removing all tariffs on 99 percent of the good by 2004. * Protection of intellectual property * Removal of most foreign direct investments with a few protections established for each country * Removal of barriers on the cross-border flow of service * Application of national environmental standard * Establishing two commissions with the power to impose fines and remove trade privileges if needed Regional integration is not only for economical reasons but it is also political. There is much opposition within each country and it takes many years to have an agreement that satisfies ever member country. Pros and Cons for NAFTA Advantages The main purpose for NAFTA is to create a larger and more efficient base for the entire North American region. The first advantage for the members of NAFTA was to reduce the tariffs that had been imposed in all their products. The cost of the products is also controlled in member nations of NAFTA since the import cost are not inflated by taxes. Lastly, the benefit is mutual for US and Canada to move production to Mexico. The...
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...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 lifted all regulations between...
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...There are many different countries that have made some type of an agreement with another country. In North America, regional integration among America, Canada, and Mexico has had both advantages and disadvantages. The NAFTA, which was first established in 1992 but did not become officially until 94, has become an important part of all three countries. Although all three countries have benefited from the NAFTA, this paper will cover the advantages and disadvantages it has had on Mexico. Advantages of the NAFTA It is safe to say that for the most part the NAFTA has been primarily a blessing for Mexico. A huge advantage for Mexico is the boost it has had on them economically. NAFTA decreased tariffs; essentially meaning that the exports and imports from Mexico increased due to the lower taxes. The NAFTA created many jobs for the people of Mexico. With the increase of jobs, came an increase in wages. The NAFTA is the largest free trade and creates more than $17 trillion in goods and services produced by these three countries. With this, Mexico has increased their economic output every year. The trade has also made it less expensive to transport the oil from Mexico into the United States, which ultimately helps both the nations. Another great attribute of the NAFTA is that the United States-Mexico industrial integration, especially in the automobile manufacturing area has increased dramatically....
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...According to the article of "12 Important Pros and Cons of Free Trade", the author had said that some manufacturers and employers are encouraged to hire foreign workers for reduce labor costs and relocate factories and plants to other countries as well as some workers are forced not to join labor unions and receive lower wages due to the threat of losing their jobs (Garage). Besides workers were threat by not letting them to join the Unions, workers may also be treated like slavery; as the author, Mr. Green, had said, “Workers live in desolate places to work and paid low wages. Opponents of free trade argue that free trade has led workers from poorer countries to work long hours and forced to live in shanties without electricity even, just so they can work and send money back to their families” (Garage). In additional, women and kid may also like slavery in unusual places in the U.S. and in other countries. as according to Mr. Kimberly, the author of “Free Trade Agreements Pros and Cons: Six Advantages and Seven Disadvantages and Their Possible Solutions”, had said, “women and children are often subjected to grueling factory jobs in sub-standard conditions”...
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...Chapter 2: Economics: The Framework for Business 1. How does economics relate to business? Can an understanding of economics help business people succeed? If so how? Economics relates to business because it teaches business people how to make choices that can get their business the most revenue with the least amount of cost. The understanding of economics can help business people succeed, economics can teach you things like marginal cost and revenues and this is essential to an type of business. Economics can teach you statistics that if used properly can provide you with an upper hand against competition. 2. Compare and contrast microeconomics and macroeconomics. How do the 2 approaches interrelate? Use a specific example to explain. Macroeconomics and Microeconomics are both dealing with economics but indifferent levels, Macroeconomics is the study of a country's overall economic issues and Microeconomics deals with economics on an individual consumer,families and individual businesses. They can affect how much you can purchase for your family and what is available for you to purchase for your family. 3. What are the fundamental elements of the free market economic system? How can businesses thrive within this system? 1. The rights to own a business and keep after-tax profits 2. The right to private property 3. The right to free choice 4. The right to fair competition Free Market economies allows businesses to thrive...
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...Polaris Case Rui’s qualitative analysis External Factors Opportunities 1. Moving manufacture to China or Mexico would reduce cost and increase profitability 2. Increasing sales in International market 3. Easy to find well trained trades people in LCCs (China and Mexico) 4. Joint venture or acquisitions in LCCs for market growth would help Polaris get in. 5. Major demand for Side-by-Sides are from southern US (California and Texas) Threats 1. Economics slowdown in US negatively impact the sales and the trend may continue in the upcoming years. 2. Increasing oil price may add to cost (production closer to customer would be ideal). 3. Macroeconomics perspective: inflation in Mexico and China might not be advantage. 4. Lack of talent in America or trades students don't like their manufacturing place. 5. Laying off 60 trained domestic employees with financial loss of 1.2 million and damage to the brand and may damage brand image. Internal Factors Strength 1. Experienced and well respected in the industry 2. Strong sales and brand name 3. Ability to extend product lines given parts and accessories market grew significantly and introduction of “Victory” 4. Established warehouse and distribution facilities in Minnesota, South Dakota, and Winnipeg 5. Proactive approach from management. Looking for ways to improve and save cost Weakness 1. 80% sales from US while the economy is sinking. Not enough exposure...
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...llegara a $100 millones por primera vez. La compañía es líder en los productos relacionados con la bromina aun siendo líder la compañía tiene fabricas pequeñas, pero con los nuevos planes de expansión se necesita la construcción de una nueva fabrica y la introducción de nueva tecnología, la empresa debate dos caminos a seguir: construir la fabrica en México o modificar una fabrica existente en Tennessee. Veamos los pros y contras, empecemos con la planta en México, esta se estima tenga un costo de $30 millones de dólares lo que se seria 30% o 20% más barato que en EUA, los salarios en México son más baratos en proporción 8 a 1; en cuanto a las contras, México todavía tiene muchas restricciones hacia la inversión extranjera aunque con el nuevo tratado de libre comercio (NAFTA) se espera estas mejoren de hecho se bajaran las restricciones de inversión privada en 14 de 19 de los productos primarios químicos y 66 de los productos químicos secundarios. En cuanto a números se esperan ventas de $48.6 millones de dólares que crecerían 10% por año y se espera que el profit sea de un 6%, el equipo costara 6 millones, el costo de venta será de 65% de ventas, los gastos son de $11 millones creciendo 5% anualmente, con impuestos del 23% y Capital de trabajo de $100,000 aumentando en 25% con depreciaciones de 31.5 años para el edificio y 7 años para el equipo. En la planta de Crayco se haría una modificación con costo de $15 millones (menor a los $30 de Monterrey), la construcción y por ende las...
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