North American Free Trade Agreement

Mexico’s Economic Activities Tertiary (60% of economy/59% of population) – 10 th most visited country in the world 10 th most visited country in the world Primary (18% of workforce) – #1 in silver – #6 in oil Secondary (25% of workforce) – #1 in TVs (25% of sector) – #3 in computers – #8 in automobiles (17.6% of sector) Subsistence/Commercial Farming (4% of economy) – #1 in Avocados, Onions, Limes/Lemons, Sunflower seeds 91% of Exports go to the USA

NAFTA Trade agreement between US, Mexico, and Canada – Signed in 1994 Eliminated/Reduced tariffs (taxes/fees) on: Imports – Goods coming in to a country Exports – Goods leaving a country

EXAMPLE: Why Tariffs Can Be Good China sells tires to US cheaper than the USA can sell them (China = $10 / USA = $15) – Try to drive US tire manufacturers out of business China raises tire prices because American business had to shut down because they can’t compete How do we solve this? US puts a tariff on Chinese tires – Tires were $10, US adds a 220% tariff After the tariff they are $32 ($10 x 2.20 = 22  = 32) – Why does this make tariffs good?

Example – Before and After NAFTA Let’s assume Company B in Mexico makes cars for $10.00 and sells them to the US When B ships the cars to the US, a 50% tariff is placed on the cars, driving the cost of the Mexican cars to $15.00 in the US – $10 x.50 = 5  5+10 = $15.00 After NAFTA, the cars have a much lower (or no) tariff, making the cars cheaper to buy – Citizens are able to buy goods for cheaper and have more money left over

Drawbacks of NAFTA 1.3 million small farmers put out of business – Immigrate to the US – Can’t compete with major farming businesses US manufacturers move to Mexico – Cheaper labor Maquiladoras Loss of US jobs Environmental Damage – Deforestation and pollution from growing number of factories and plants

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Benefits of NAFTA Cheaper goods – Groceries – Gas (oil) – More money in our pockets Increase in trade – 2.9 million  1.2 trillion – Increase in all three economies New Mexican Jobs… “Reduced” poverty in Mexico – Extreme – 24% to 14% – Moderate – 54% to 47% Helps American businesses save money Success Stories – Caterpillar Caterpillar – Mary Kay Mary Kay

Support or Oppose NAFTA…why? A.Mexican small farm owner B.Mexican owner of large corn factory C.Owner of grocery store in US D.Single parent at Detroit car factory E.The United States F.Mexico

You Decide Write a statement on your stance of whether or not we should keep NAFTA. Support your argument with two pieces of evidence either for or against. What country benefits the most? Why? What country is hurt the most? Why? What group of people benefits the most? Why? What group of people is hurt the most? Why?