Warm Up Why do you think it is good to trade with other countries? What are some of the difficulties countries might face as they trade with one another?

What is the WTO?

Objective I am learning about NAFTA. This means that I will be able to identify patterns of trade between places based on resources.

Vocab Tariff- Taxes on items traded

Brief History- Expansion of Trade In the 1940s, in the post-war period, was a boom for trade and rising globalization. It urged several previously stagnant countries into trading with other countries. In the past, trading was a way for most countries to gain access to resources not available to them. Though, several resource-rich countries have more complex economic agenda when it comes to trade. Those countries take advantage by imposing very high tariffs on trade in goods. No one can complain because of the absence of trade standards and a governing authority for trade.

Trade Supervision By 1944 and the years to come, many initiatives to create a governing body for global trade have been done.

World Trade Organization WTO came into force on January 1, 1995, with the 75 existing GATT members and other European communities acting as the founding countries. The organization now has 153 members, representing more than 95% of total world trade.

What is NAFTA?

NAFTA 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

What is NAFTA? NAFTA was written to create a Free Trade Area in North America “Free Trade” means that counties 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

Why NAFTA? 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

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

NAFTA Pros 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 Mexico 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.

What is the best title for this cartoon? “NAFTA Members Prepare for Picnic!” “NAFTA Members Graciously Share Business Ventures!” “NAFTA Members Cover Up Conspiracy!” “”NAFTA Members VIE for Business!”

What might be some criticisms of NAFTA?

NAFTA Cons 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

Maquiladoras Wages Minimum Wage Mexico- $3.40 per day vs U.S. $7.25 per hour Example: Hourly compensation costs for production workers in manufacturing Mexico- $1.21 vs U.S. 17.70

A Closer Look at Maquiladoras These factories make many types of Products:

Country of Origin- Tijuana Maquiladoras Only

Companies with Maquiladoras in Mexico 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

Maquiladoras: Good or Bad United State 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 much as in the U.S They would be able to sell their products 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 job. 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 Mexico’s 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.

Exit Ticket In your own opinion, do you think NAFTA is good or bad? Compose a piece that explains what your opinion is and support with details from your notes.