Warm Up 5/24/2013 Get your binders and copy ROAR! Make sure you
have a textbook on your desk. Define the words in box #1 on your
notes page.
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NAFTA, the North American Free Trade Agreement, was signed by
the United States, Canada and Mexico. 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 countries 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 Mexican products more competitive in these
markets and increases Mexicos 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.
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a. NAFTA Members Prepare for Picnic! b. NAFTA Members
Graciously Share Business Ventures! c. NAFTA Members Cover Up
Conspiracy! d. 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. US - $5.15 per hour
Example: Hourly compensation costs for production workers in
manufacturing Mexico - $1.21 vs US - $17.70 (Global Trade Watch,
The NAFTA Index, October 1, 1998)The NAFTA Index
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These factories make many types of products.
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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
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United States 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 in the United States. They would be
able to sell their product 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 jobs. Goods made in Mexico
would cost a lot less because labor is cheaper there. Mexico 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 Mexicos 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.
Good or Bad?