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The North American Free Trade Agreement (NAFTA) am

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The North American Free Trade Agreement (NAFTA) among the United States, Canada and Mexico was passed by Congress amid much controversy. Opponents of the agreement felt that it would take jobs away from Americans and move them to Mexico, where labor rates are far less. Proponents of the measure felt that it would create jobs and be good for the American economy because it would make it easier for American goods to be exported to Canada and Mexico. This research examines the preliminary results of NAFTA by examining the negative and positive effects it has had on two of the three participants, the United States and Mexico.

NAFTA is expected to lead to greater trade between the United States and Mexico in part through the removal of trade barriers. Mexico lifted many of its barriers, including significantly reducing its tariff rates, during the 1980s, but NAFTA is expected to remove remaining barriers. The removal and reduction of tariffs makes American products more competitive in Mexico due to lower prices, which results in greater market opportunities for American companies.

In addition to the reduction of tariffs, NAFTA is also designed to enhance trade among its participants by facilitating transportation of participating countries' goods within other countries. In this way, American goods should be able to move easily through Mexico and Canada, as Mexican goods should flow without difficulty within the United States. This is expected to benefit a wide variety of

. . .
s will be applied to components which do not originate in Canada or the United States. Mexico also faces some job losses from NAFTA, most notably in the maquiladoras. These are border plants that have traditionally been associated with basic assembly and rough manufacturing work. Introduced in 1965 after the United States modified its immigration laws to make seasonal migration for agricultural jobs in California more difficult, maquiladoras were one-half of a twin plants program. American companies would set up a plant in the United States which manufactured components; these components were then shipped across the border to the maquiladora where the labor-intensive assembly work would take place. The finished piece was then back across the border for distribution and consumption. Duty was paid only on the value added in Mexico. Maquiladoras were initially established in order to take advantage of the low labor rates in Mexico. When NAFTA was implemented, there were more than 2,200 maquiladora facilities in operation employing more than 500,000 workers. The plants stretched from the Gulf Coast to Tijuana on the Pacific ocean. Raw material was brought into Mexico from throughout the world for final assembly, and co
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Approximate Word count = 2224
Approximate Pages = 9 (250 words per page)

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