NAFTA North American Free Trade Agreement

NAFTA or the North American Free Trade Agreement was signed by The United States, Canada and Mexico in 1993 and went into effect on Jan. 1, 1994.

Key Concepts NAFTA creates a free trade area in North America among it’s member nations. Free trade means that member countries can trade goods with each other without having to pay a tariff on those goods Tariff is a tax a country places on an imported good Free trade eliminates barriers and promotes fair competition through the movement of goods and services across borders

What Does NAFTA do? Allows free movement of goods and services between the United States, Canada, and Mexico Provides Competition in the free trade areas Increases investment opportunities for member countries Protects the property rights of people and businesses in the community Solves problems that arise between the member countries Encourages cooperation between the member countries

EU NAFTA How does NAFTA compare to the European Union? Single currency, the Euro Transnational gov that expects member countries to give up its power over decisions about defense & foreign affairs Allows people to immigrate & emigrate freely . Socializing agency that works to create European citizenship and cultural identity Eliminates tariffs Promotes trade and expands markets Creates jobs and improves standard of living Promote cooperation among member nations Member countries maintain individual currency Only purpose is a simple free trade agreement People can not move freely across national borders Allows capitalists free reign to invest and industrialize

Most economists agree that NAFTA has been good for the countries involved. What do you think? Answer the following questions. What information does the graph show? What is surface trade? What happen between 2008 and 2010? According to the graph, has NAFTA achieved it’s goal of increasing trade among member nations? Explain Based on the graph, do you feel the member nations have benefited equally from NAFTA? Why/why not? Surface Trade between U.S. and NAFTA: 1995 – 2012

NAFTA PROS Free trade increases sales for the United States, Canada, and Mexico, thus strengthening their economies Lack of tariffs allows countries to sell its goods in the other countries at lower prices making their products more competitive in these markets Created jobs in Mexico Reduced inflation by decreasing costs of imports Makes it easier for Americans to purchase Canadian and Mexican goods and vice versa Increase in real wages in all 3 countries Increased trade between member countries American and Canadian companies can take advantage of lower Mexican labor costs, while still maintain corporate entities in home country

NAFTA CONS Mexican workers benefited less than American or Canadian workers There are no regulations on customs Americans have lost jobs to foreign soil Illegal immigration still continues to grow US trade deficit has increased Factories called maquiladoras are built on the Mexican border and workers are hired there at much lower wages than a worker would be paid in the US

What would be the best title for this cartoon? NAFTA Members Prepare for a Picnic NAFTA Members Share Business Ventures NAFTA Cover Up NAFTA Tug of War; Members Vie for Business

Exit Ticket Define: NAFTA _______________________________________________ Tariff ________________________________________________ Free Trade ___________________________________________ Recall: Three main points that reflect the policies of NAFTA 1. 2. 3. Analyze: How does the artist feel About the effectiveness of NAFTA? Use evidence from the cartoon to Support your interpretation. What Do you think? Do you agree or Disagree with artist point of view? Why/why not?