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UH INTB 3355 - NAFTA
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INTB 3355 1st Edition Lecture 2 Outline of Last Lecture I. Introduction to the Global Environment of BusinessOutline of Current Lecture I. Global Regional Co-operationII. The North American Free Trade Agreement (NAFTA)a. NAFTA Stipulationsb. Evaluating NAFTA c. Alternative Explanationsd. Current NAFTA ConcernsCurrent LectureI. Global Regional Co-operationMultilateral negotiations and global economic competition provide powerful incentives. In 1990’s, countries boost in efforts to establish free trade areas and customs unions in Asia and in North and South America, for organizations work as a regional basis, and to strengthen economics, which later on led to regional economic integration and the formation of NAFTA (Canada, Mexico, US)II. The North American Free Trade Agreement (NAFTA)- NAFTA was originally CAFTA before Mexico joined it. NAFTA was launched on January 1, 1994. Its implementation was completed on January 1, 2008. - The Main Goal is promoting economic growth by easing the movement of goods and services between the US, Mexico and Canada, also to solve immigration issue due to push factors (lack of economic opportunities) and pull factors (jobs in construction, agriculture, existing families…)- Precursor: Canada-US Free Trade Agreement (since 1989)a. NAFTA Stipulations- Removal of most tariffs and restrictions on trade between the US, Canada, and Mexico - Wide range of agreements on agricultural, textile and automotive tradeThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.- Agreements on telecommunications and intellectual property- Mobility of workers (by issuing work visa and other types of visa)- Environmental policiesb. Evaluating NAFTA Intra-North American trade has more than tripled since NAFTA's inception. Agricultural trade in both directions between Mexico and the US increased from $7.3 billion in 1994 to $20.1 billion in 2006. Trade between the three parties currently accounts for about 80% of Canadian and Mexican trade and more than a third of US trade. There was also an increase in foreign direct investment between the three countries. Mexico was the first Latin government to default on its debt, but it has been protected from such financial instability in South America. Mexico’s export manufacturing is increased especially in producing cars.At the same time, there is a reduction in manufacturing jobs in the US, which leads to direct losses vs. changing pattern of employment. Environmental concerns have been raised in Mexico’s industrial areas, along with the imbalance between Mexican productivity and real wages. Mexico was affected was also by 2001 US recession and so was its agriculture.c. Alternative Explanations- Mexican economic crisis 1994-1995 (called tequila crisis) happened at the same time NAFTA was implemented- Losing manufacturing jobs to China- World economic crisisd. Current NAFTA Concerns- In the US, people thought they were losing manufacturing jobs to Mexico- In Mexico, people were concerned about US migration policies and highcorn subsidies for US farmers- In Canada: energy trade


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