NAFTA: Promoting Free Trade in North America

1. North America Free Trade Agreement

2. NAFTA: Who? NAFTA, the North American Free Trade Agreement, was signed by the United States, Canada, and Mexico.

3. NAFTA: What? 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!

4. NAFTA: When? NAFTA was signed in 1993 and went into effect on January 1, 1994.

5. NAFTA: Why? The purpose of the agreement is to: • Reduce barriers and encourages trade between member countries. • Allow free movement of goods and services among the countries. • Encourage cooperation among countries.

6. 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 Mexico’s 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. NAFTA: Pros

7. NAFTA: Trade Growth Most economists agree that the agreement has been good for the countries involved.

8. What is the best title for this cartoon? 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!”

9. What might be some criticisms of NAFTA?

10. Free trade has caused more U.S. job losses than gains, especially for higher-wage jobs. NAFTA: Cons • 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.

11. Minimum WageMexico - $3.40 per day vs. US - $5.15 per hour Example: Hourly compensation costs for production workers in manufacturingMexico - $1.21 vs US - $17.70 (Global Trade Watch, The NAFTA Index, October 1, 1998) MAQUILADORAS:Wages

12. 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 Companies with • 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 Maquiladoras

13. Is NAFTA good for everyone? Your Turn to Teach! You will create a poster that expresses the viewpoint of the roll that you chose. Your group will use the poster to present your viewpoint to the rest of the class.

14. American Business Owners • Do you think American business owners would like NAFTA and maquiladoras? Why or why not? 1. They can move their factories to Mexico and ship the goods to the US with no tariffs. 2. They would not have to pay the Mexican workers as much as in the United States.

15. Mexican Business Owner • Would Mexican Business owners like NAFTA? Why or why not? 2.They would not like foreign-owned factories because they would create competition.

16. Mexican Government • Would a Mexican Government official like NAFTA? Why or why not? 1. NAFTA would be good for the economy of Mexico. 2. Maquiladoras would provide jobs for Mexicans, but the profit made by maquiladoras would go back into the US economy, not into Mexico’s

17. Mexican Factory Worker • Would a Mexican factory worker like NAFTA and maquiladoras? Why or Why Not? 1. It would provide a job in a country where there are not enough jobs 2. However, the wages are very low and the working conditions are not good

18. American Factory Worker • Would an American factory worker like NAFTA and maquiladoras? Why or why not? 1. 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.

19. Environmentalists • Would an environmentalist like NAFTA and maquiladoras? Why or why not? 1. Building factories creates pollution. An environmentalist would want to make sure the US, Canada, and Mexico all had laws to protect the environment. Because all three countries are neighbors, air pollution from one affects them all.

20. American Consumer • Would the American consumer like NAFTA and maquiladoras? Why or why not? 1. Goods made in Mexico would cost a lot less because labor is cheaper there. (Cheaper goods would be available to American consumers.)