NAFTA was signed in 1993 by the US, Canada, and Mexico to create a free trade area with no trade barriers or tariffs between the countries. The goals of NAFTA were to allow free movement of goods and services, promote competition, protect property rights, and resolve disputes among members. While NAFTA increased trade, profits, and economic cooperation, it also led many US factories to relocate to Mexico to take advantage of lower wages, resulting in job losses in higher-paying US manufacturing jobs.

1. By
VIJAY MEHTA

2. 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.

3. 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. 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.

5. Most economists agree that the agreement
has been good for the countries involved.

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.

7. 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.  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.

10.  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)

11.  These factories make many types of
products.

12.  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

13. Good or Bad?
United States Mexico
 They can move their factories to  They would not like foreign owned
Mexico and ship the goods to the factories because they would
US with no tariffs. create competition and hurt
 They would not have to pay the Mexican owned businesses.
workers in Mexico as much as in  Maquiladoras would provide jobs
the United States. for Mexicans, but the profit made
 They would be able to sell their by maquiladoras would go back
product for cheaper, but still into the US economy, not into
make a good profit Mexico’s
 Many American factory workers  It would provide a job in a country
lose their jobs because the owners where there are not enough jobs
move the factories to Mexico.  However, the wages are very low
American factory workers cannot and the working conditions are
move to Mexico to keep their jobs. not good
 Goods made in Mexico would  Building factories creates
cost a lot less because labor is pollution. An environmentalist
cheaper there. would want to make sure that
Mexico had laws to protect the
environment.