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.
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.
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.
Most economists agree that the agreement has been
good for the countries involved.
 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.
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!”
 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.
 Minimum Wage
Mexico - $3.40 per day vs. US - $5.15 per hour
 Example: Hourly compensation costs for
production workers in manufacturing
Mexico - $1.21 vs US - $17.70
 (Global Trade Watch, The NAFTA Index,
October 1, 1998)
 These factories make many types of products.
 3 Day Blinds •Honda
 20th Century Plastics •Honeywell, Inc.
 Acer Peripherals •Hughes Aircraft
 Bali Company, Inc. •Hyundai Precision America
 Bayer Corp./Medsep •IBM
 BMW •Matsushita
 Canon Business Machines •Mattel
 Casio Manufacturing •Maxell Corporation
 Chrysler •Mercedes Benz
 Daewoo •Mitsubishi Electronics Corp.
 Eastman Kodak/Verbatim •Motorola
 Eberhard-Faber •Nissan
 Eli Lilly Corporation •Philips
 Ericsson •Pioneer Speakers
 Fisher Price •Samsonite Corporation
 Ford •Samsung
 Foster Grant Corporation •Sanyo North America
 General Electric Company •Sony Electronics
 JVC •Tiffany
 GM •Toshiba
 Hasbro •VW
 Hewlett Packard •Xerox
 Hitachi Home Electronics •Zenith

United States
 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 in the United
States.
 They would be able to sell their product
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 jobs.
 Goods made in Mexico would cost a lot
less because labor is cheaper there.
Good or Bad?
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.