NAFTA Flashcards

1
Q

Why NAFTA

A
  • Access to low cost Mexican labour
  • New jobs in Mexico
  • Access to more consumers
  • Faster economic growth
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2
Q

What are Maquiladoras?

A
  • Almost all are foreign-owned assembly plants
  • Can import machinery and materials from other countries tariff free and export finished products.
  • Contributed 25% of total GDP in Mexico
  • Almost all maquiladoras are foreign owned.
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3
Q

Objectives of NAFTA

A
  • Lower tariff walls and removal of non-tariff barriers for member countries
  • Promote further trilateral cooperation
  • Increase investment opportunities
  • Promote conditions of fair competition
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4
Q

Impact of NAFTA on Member Countries

A
  • Loss of competitiveness (US import agriculture products from Mexico, export to Canada)
  • Elimination of tariffs mean that textiles in US will move operations to Mexico
  • Free movement of trucks and trains between the countries, greater ease of movement of goods
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5
Q

Concerns of NAFTA

A
  • Some segments of US economy will be harmed
  • Wages and employment of unskilled workers in USA will fall
  • Mexico’s inadequate environmental and worker protection laws will encourage U.S companies to relocate there
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6
Q

Impact of NAFTA on Asian economies

A
  • US might divert trade from Asia by importing goods from Mexico
  • USA might divert FDI to Mexico instead of Asia
  • Asian exporters will face stiff competition from Mexico and Canada
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7
Q

Mercosur

A

South American trading bloc

-Customs union

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