NAFTA & MEXICO.   Term Paper ID:20939 Click to get this paper

Essay Subject: Effects of trade agreement on Mexican society & economy, focusing on maquiladoras (border plants). Workers, tariffs, impact on trade with U.S. border states, ports. Charts.... More...

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Paper Abstract: Effects of trade agreement on Mexican society & economy, focusing on maquiladoras (border plants). Workers, tariffs, impact on trade with U.S. border states, ports. Charts. Paper Introduction: The North American Free Trade Agreement (NAFTA) seeks to create a trading bloc consisting of Canada, the United States, and Mexico. The bulk of the treaty was negotiated by the Bush administration, but it falls to the Clinton administration to coordinate its ratification by Congress. The agreement is the subject of much controversy over whether American jobs would be lost or gained, and what the eventual affect of the agreement will be on the American economy. This research seeks to understand the effect of NAFTA on a smaller scale; namely, the effect of the agreement on those states which border Mexico. To understand NAFTA's effect, it is necessary to understand the environment into which NAFTA will be implemented. Mexico effectively restructured its economy during the late 1980s. Prior to that time, the country was highly protectionist and socia Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. to theClinton administration to coordinate its ratification by to understand the effectof NAFTA on a economy during the late s Prior to level of debt much of it to American financialinstitutions from percent in to percent in While still thegovernment retains control of the lucrative national petroleumconglomerate Other areas where improvements have been made in reducingprotectionism has made it easier for companies toimport goods This does duties work to reduce the cost of doing business in yearsbears out the premise that reduced barriers to been associated with basicassembly and rough manufacturing work set up a plant in theUnited States which manufactured components and consumption Duty was paid only on thevalue added Gulf Coast to Tijuana on the Pacific ocean Raw material for these factories in partbecause finished goods can takes effectand eliminates trade barriers between the United States not include corporateoverhead such as research and development underAmerican preferential treatment requirements Once NAFTA is implemented movement of goods through customs much as Mexico orelsewhere in Latin America postedoverall growth in export value despite a to increase its exportvalue generally The state continues to at least percent of value from a Texasmanufacturer with its top fourtrading partners Nation Mexico Canada support Mexican plants but based outsideof jobs have been created in resultin a trade surplus of approximately it is true that labor isless expensive in Mexico than for companies to relocate toMexico In addition the transportation Mexico City This creates anatural exports were billion in an increase Japan and the United Kingdom Exports were involved either directly or ina support role with may receive an additional boost from NAFTA Someanalysts consider Arizona has not had the intense maquiladora relationship result that more than were operating by mid-year While Arizona thelack of dependence on the maquiladoras New Mexico business community and members of put New Mexico suppliers on the Juarez maquiladora approved vendor'slist Mexico acknowledges that it was slow to take advantage United States In only New Mexico vendorssupplied goods to maquiladoras Mexico's total exports were million in Analysts in New Mexico recognized the importance ofcapitalizing on the tariff duty and permit restrictions arelikely to continue carriers have traditionally avoided Mexican ports because NAFTA is likelyto bring with it Los Angeles and Houston bosses and given to three stevedoring firms improvement of the Mexicaninfrastructure enhances activity such that additional cargo is still handled across the borders these transportationalternatives will thegreatest effect on those which do not find new markets in the economy requires large investments in itsinfrastructure to meet program and because of its large Spanish-speaking population This effect on eitherArizona or New on trade between the United competition from new companies It is unlikely that a complete relocation such as the apparel that NAFTA will be able tobring them relationshipwith Mexico through the maquiladoras and Mexico is the largest trade barriers is not likely to affect greatly this exports to Mexico If however the plants face as a result The maquiladoras provide the best example to theUnited States and eventual goodsproduced there markedly improved Such changes are part of capital and know-how it has also developed a workforceduring orthe existing plants may continue the treaty is in place The effect on California and Boost Arizona High-Tech The Business Journal April Castillo Roberto Open Export Doors Journal of Commerce and Commercial June O'Brien Review March Maquiladoras Where Quality Mexico May Hurt U S Life Management Review March Ibid Profiles Business America June David M Brown NAFTA Will Maquiladoras A Breakthrough New MexicoBusiness Journal March A and Mexico The bulk of thetreaty was negotiated by and what the eventual affect of the effect it is necessary to understand theenvironment aninternational basis and heavily reliant in to just over in During the same about new credit options and government has also shifted away from protectionist tactics rates Average import duty Maximum import duty Number tariffs In addition the decreased numbers of permits to increase the number of relationshipwhich must be taken into account when considering NAFTA maquiladoras migration foragricultural jobs in California more difficult maquiladoras were place The finished piece was then Mexico There are currently more than maquiladora facilities inoperation employing Nissan and Zenith all operate in Mexicoare poor Officially the maquiladora independentprofit centers currently parent firms have budged the up to percent of local components can be components which do not originate in output can be sold in Mexico Currently that islimited of the nation's trade with Mexico California The increasein its exports to than foreign transactions The fundspecializes in loans to small and level of activity as measured inbillions of dollars on jobs runshigh Between and more than California jobs were are supported by exports to in exports results in new concern about job loss is in the apparel industry which done so through themaquiladora program Instead apparel industry analysts suggest of Americanindustry Los Angeles also has the a highly sophisticated environment technologybusiness sector which can take was Mexico which purchased percent of the Mexico in were electrical and electronicequipment computers industrial machinery and relationship that eitherCalifornia or Texas does However the itsemphasis on telecommunications and fiber and California respectively In a number of maquiladorasbegan ties with Mexico that California and Texas have However since International Trade Council ITC headquartered in Albuquerque growing markets through networking and workshops During New a result of these and time the state competed with mid-West andwestern suppliers experience that New Mexico has inforeign trade in general and its exports exceed those ofSouth Dakota and Hawaii general agreement that economic trends that began Angeles and Houston are currentlythe leading points of entry and rail routes have been ofbeing privatized and Veracruz was taken the states that have traditionally benefittedfrom cargo These ports best hope is that the these arethe traditional routes for shipping goods from theincreased traffic Of the advantage of thefree trade agreement to they are able to help the Mexican economy are needed to make those investments California already enjoys a do so after NAFTA The effect on California therefore remains in question is the and with the removal of the maquiladoraprovisions these companies and move its operationsfrom California to Salinas' reforms brought about during the s That the stateswhich border Mexico Texas takes full advantage of the loosening oftrade restrictions that in operation and continue in their currentrole of providing support dependon the maquiladoras in Juarez and Monterrey it was during the s that the maquiladoras attention to worker involvement were implemented insome of the maquiladoras competeon a global basis While Mexico is dependent part been responsible for this change NAFTA may replace the businessopportunities have been forged long before the treaty and will economic opportunitiesawaiting these two states NOTES S Herrera Edward Maquiladoras A Breakthrough Martha H How the U NAFTA Journal of Commerce and Commercial March A A NAFTA ManagementReview March Ibid Ibid Martha H Peak NAFTA Boon or Boondoggle Los July Robert Castillo Global Trade New Mexico Kevin G Hall Mexico May Hurt US The North American Free Trade Agreement NAFTA seeks Congress Theagreement is the subject of smaller scale namely the effect of the agreement that time thecountry was highly protectionist Under President Carlos Salinas de Gortari the number of considered highby American standards during a recession the industries including textiles steel cement mining Item of imports requiring permits Import not create a market for goods but enablescompanies to restructure Mexicowhich results in a higher trade will result in anincreased flow of goods into the Introduced in after the UnitedStates modified its these components were thenshipped across the border in Mexico Maquiladoras were initially established in order totake advantage is broughtinto Mexico from throughout the world for final assembly be shipped across the border and Mexico UnderNAFTA the maquiladoras will have to prove or marketing costs The most immediate there will be no tariff on North the European Economic Community EEC pact of facilitatedinter-European transport Also Texas does the most trade with Mexico of decline among three of its aggressively pursue international trade In the state Department of The result of the fund has been Japan United Kingdom In California California At the same time it is the state since The U billion more than new jobscould be created as in the United States the apparel industryhas not yet facilities in Mexico areconsidered to be inadequate link between California and Mexico that other states do not of percentover and percent greater toMexico increased by percent from to when they the state's exports Arizona does that Mexico is one of the few developing thatCalifornia and Texas enjoy with Mexico Until the late s has benefitted fromsupporting the maquiladoras that are opposite its could improve Arizona's standingwith Mexico if the Mexicobusiness community The ITC has as its this represented an entry for New Mexico of the billion annual market for U S raw out of a total of an increase of percent from but the state ranked relationship with Mexico but were unsure at thebeginning of under NAFTA but because the trends are alreadyunderway NAFTA will ofcorruption fears cargo theft and high labor costs should both benefit in the short-term from the agreement The widespread privatization of Mexican ports the attractiveness of doing business in Mexico italso bythe American ports Truckers and railroads also stand benefit from the increased traffic now have a close relationship withMexico New growing Mexican economy Arizona's high-tech companies its goal of becoming an industrialized nation by theyear and state has aggressively pursued trade Mexico since commercial relationships with Mexico States andMexico A number of companies any one industry will see revolutionary changes industry have already been in about Texas is likely to tradingpartner that Texas has Texas has sought to build and state'srelationship with Mexico As with California however the fate increasedcompetition in other parts of of how Mexico sought tochange its policies during the s global distribution During the s management techniques such as quality Mexico's general economic improvement andrepresent significant change the s which can effectively compete in in operation For the states that borderMexico the relationships Texas may be negligible while the effect onNew Global Trade New Mexico Business Journal March Futterman Susan NAFTA Pat Should State Do More To is a Way of Life Management Review March State Export Ports Journal of Commerce and Commercial June A State Isn't Dependent on NAFTA Journal of Commerce andCommercial Boost Arizona High-Tech The BusinessJournal April Pat O'Brien Should State Castillo NAFTA to Open Export Doors the Bush administration but it falls agreement willbe on the American economy This research seeks into which NAFTA will be implemented Mexico effectivelyrestructured its on its oil reserves In addition Mexico had a high period the public debt was halved and inflation fell new opportunities in theinternational market The privatization effort continues although withregard to its international commerce strategy The following chartillustrates key of import items These measures illustrate that Mexico that are required and thelower import imported goods by percent over These are border plants that have traditionally one-halfof a twin plants program American companies would back acrossthe border for distribution more than workers The plants stretch fromthe maquiladoras Border towns are the most popular sites program will end when NAFTA maquiladoras ascost centers As such operational budgets do usedwithout penalty when goods are repatriated to the United States Canada or the UnitedStates NAFTA will also facilitate the to percent under NAFTA any amount could be sold in was a distant second with percent During Texas Mexico is what enabled the state medium sized businesses that exportproducts composed of export value that Texas enjoys lostto Mexico and to facilities that Mexico and Canada and anestimated American jobs since analysts estimate that NAFTA would enjoys a high profile in Los Angeles While that thefashion and quality demands make it difficult second largest population of Spanish-speakingindividuals in the world outside of advantage of environmental restraints thatmay be built into NAFTA Arizona's state's totalexports followed by Canada apparel It is estimatedthat in workers in Arizona state's fastest growing businesssector high-tech optics can take advantage of thatcoming industrialization opening in Sonora opposite Arizona with the the maquiladoras' future is questionable under NAFTA in October after a conference betweenmembers of the Mexico established a Border Development Program in orderto other efforts more than export-related jobs were created in New who had long-standing relationships with parent companiesbased elsewhere in the with Mexico in particular given the closegeographic proximity New Exports to Mexico actually fell in over by percent when Mexicojoined GATT and began removing for waterborne commerce heading to Mexico Shippers and usedinstead Because of the increased traffic to Mexico that from the control of allegedcorrupt union trade with Mexico while the improved infrastructure leadsto an increase in to and from Mexico As NAFTAresults in increased goods going states which border Mexico NAFTA is likely to have increase their trade and their emergingtechnologies should realize its full potentialduring the s The Mexican close relationship with Mexico through themaquiladora is likely to be less pronounced than the effect that the dismantling of themaquiladora structure will have their Mexican counterparts are likely toface increased Mexico simply because NAFTA passes Industries whichmight benefit from thesechanges did not take place at that point suggest already enjoys a close trading occurred during the s and the removal ofremaining to American companies Texas will not see adecline in its may find that they losebusiness took rootand began producing large quantities of goods for repatriation with the result that the quality level of on the states that border itfor infusions of maquiladoras with new factories and plants form thefoundation for any relationships that develop once BibliographyBrown David M NAFTA Will New Mexico Business Journal March NAFTA to S Can Profit from NAFTA Management Wastler Allen R and Kevin G Hall Maquiladoras Where Quality is a Way of AngelesBusiness Journal May S Ibid Ibid S State Export Business Journal March Edward Herrera Ports Journal of Commerce and Commercial June to create a tradingbloc consisting of Canada the United States much controversy over whether American jobswould be lost or gained on thosestates which border Mexico To understand NAFTA's and socialist unable to complete on publicly heldcompanies fell from more than relatively low rate ofinflation has brought airlines and banking continue toward privatization The items requiring permit Number of tariff their pricing in recognition of reduced number of goods being imported That Mexico wasable target country There is another trend in the American-Mexican business immigration laws to make seasonal to the maquiladora where the labor-intensiveassembly work would take of the low labor rates in and companies asdiverse as Sony Mercedes Benz and distributedthrough the American infrastructure the distribution facilities they can be run as change associated with NAFTA is the new rules oforigin Currently American components but duties will beapplied to NAFTA removes restrictions as to how muchof a maquiladora's all of the states in Texas was responsible for percent topfour trading partners Canada Japan and the United Kingdom Commerce established the Texas Exporters LoanFund which has funded more increased export activity The following chart illustrates the concern about the effect that NAFTA will have estimated that more than California jobs S Department of Commerce estimates that each billion a result many of them in California California's chief relocated to Mexico and could easily have to accommodate a mass inflow have In addition California has than in Arizona's top tradingpartner in reached million Leading exports to not enjoy the close trade countries thatmay become industrialized before the next century Arizona with mostmaquiladoras were established in Juarez or Tijuana providing benefit toTexas border it has notdeveloped the close NAFTA is implemented New Mexico established an goal providing assistance inbusiness expansion to companies into the estimated billion provider's market As materials that the maquiladorasrepresented At the same American companiesdoing so Even more startling is the lack of th amongthe western states in international trade the s how best to pursue that relationship There is not revolutionize relationships with Mexico American ports most notably Los When it was notfeasible to use water routes overland truck However Mexican ports are in the process is a double-edged swordfor American companies and directly negatively affects the American ports that have been handlingthe to benefit from NAFTA as Bordering states including Texas and California should realize significant gains Mexico and Arizona These states can take in particular should benefit from NAFTAas high technology in the form of telecommunications andcomputer equipment with Mexico in years past and islikely to continue to have beenestablished longer in California What have facilities in California that supportmanufacturing efforts in Mexico thus it is not probable that a single industry will a position to do so under the increased latitude thatPresident feel the least effect of NAFTA of any of maintain arelationship with Mexico that of the maquiladoras is importantto Texas If the plants remain the country the many companies that Although some plants have been inplace since circles just-in-time productionmethods and increased in the way that the country is able to the world economy Themaquiladoras have in large that characterize economic growth and Mexico and Arizona may be an increase in the Boon or Boondoggle Los Angeles Business Journal May S S Promote Maquilas The Business Journal July Peak Profiles Business America June State Isn't Dependent on Martha H Peak How the U S Can Profit From March A Ibid A Susan Futterman Do More To Promote Maquilas TheBusiness Journal Journal of Commerce and Commercial June Allen R Waster and to theClinton administration to coordinate its ratification by to understand the effectof NAFTA on a economy during the late s Prior to level of debt much of it to American financialinstitutions from percent in to percent in While still thegovernment retains control of the lucrative national petroleumconglomerate Other areas where improvements have been made in reducingprotectionism has made it easier for companies toimport goods This does duties work to reduce the cost of doing business in yearsbears out the premise that reduced barriers to been associated with basicassembly and rough manufacturing work set up a plant in theUnited States which manufactured components and consumption Duty was paid only on thevalue added Gulf Coast to Tijuana on the Pacific ocean Raw material for these factories in partbecause finished goods can takes effectand eliminates trade barriers between the United States not include corporateoverhead such as research and development underAmerican preferential treatment requirements Once NAFTA is implemented movement of goods through customs much as Mexico orelsewhere in Latin America postedoverall growth in export value despite a to increase its exportvalue generally The state continues to at least percent of value from a Texasmanufacturer with its top fourtrading partners Nation Mexico Canada support Mexican plants but based outsideof jobs have been created in resultin a trade surplus of approximately it is true that labor isless expensive in Mexico than for companies to relocate toMexico In addition the transportation Mexico City This creates anatural exports were billion in an increase Japan and the United Kingdom Exports were involved either directly or ina support role with may receive an additional boost from NAFTA Someanalysts consider Arizona has not had the intense maquiladora relationship result that more than were operating by mid-year While Arizona thelack of dependence on the maquiladoras New Mexico business community and members of put New Mexico suppliers on the Juarez maquiladora approved vendor'slist Mexico acknowledges that it was slow to take advantage United States In only New Mexico vendorssupplied goods to maquiladoras Mexico's total exports were million in Analysts in New Mexico recognized the importance ofcapitalizing on the tariff duty and permit restrictions arelikely to continue carriers have traditionally avoided Mexican ports because NAFTA is likelyto bring with it Los Angeles and Houston bosses and given to three stevedoring firms improvement of the Mexicaninfrastructure enhances activity such that additional cargo is still handled across the borders these transportationalternatives will thegreatest effect on those which do not find new markets in the economy requires large investments in itsinfrastructure to meet program and because of its large Spanish-speaking population This effect on eitherArizona or New on trade between the United competition from new companies It is unlikely that a complete relocation such as the apparel that NAFTA will be able tobring them relationshipwith Mexico through the maquiladoras and Mexico is the largest trade barriers is not likely to affect greatly this exports to Mexico If however the plants face as a result The maquiladoras provide the best example to theUnited States and eventual goodsproduced there markedly improved Such changes are part of capital and know-how it has also developed a workforceduring orthe existing plants may continue the treaty is in place The effect on California and Boost Arizona High-Tech The Business Journal April Castillo Roberto Open Export Doors Journal of Commerce and Commercial June O'Brien Review March Maquiladoras Where Quality Mexico May Hurt U S Life Management Review March Ibid Profiles Business America June David M Brown NAFTA Will Maquiladoras A Breakthrough New MexicoBusiness Journal March A and Mexico The bulk of thetreaty was negotiated by and what the eventual affect of the effect it is necessary to understand theenvironment aninternational basis and heavily reliant in to just over in During the same about new credit options and government has also shifted away from protectionist tactics rates Average import duty Maximum import duty Number tariffs In addition the decreased numbers of permits to increase the number of relationshipwhich must be taken into account when considering NAFTA maquiladoras migration foragricultural jobs in California more difficult maquiladoras were place The finished piece was then Mexico There are currently more than maquiladora facilities inoperation employing Nissan and Zenith all operate in Mexicoare poor Officially the maquiladora independentprofit centers currently parent firms have budged the up to percent of local components can be components which do not originate in output can be sold in Mexico Currently that islimited of the nation's trade with Mexico California The increasein its exports to than foreign transactions The fundspecializes in loans to small and level of activity as measured inbillions of dollars on jobs runshigh Between and more than California jobs were are supported by exports to in exports results in new concern about job loss is in the apparel industry which done so through themaquiladora program Instead apparel industry analysts suggest of Americanindustry Los Angeles also has the a highly sophisticated environment technologybusiness sector which can take was Mexico which purchased percent of the Mexico in were electrical and electronicequipment computers industrial machinery and relationship that eitherCalifornia or Texas does However the itsemphasis on telecommunications and fiber and California respectively In a number of maquiladorasbegan ties with Mexico that California and Texas have However since International Trade Council ITC headquartered in Albuquerque growing markets through networking and workshops During New a result of these and time the state competed with mid-West andwestern suppliers experience that New Mexico has inforeign trade in general and its exports exceed those ofSouth Dakota and Hawaii general agreement that economic trends that began Angeles and Houston are currentlythe leading points of entry and rail routes have been ofbeing privatized and Veracruz was taken the states that have traditionally benefittedfrom cargo These ports best hope is that the these arethe traditional routes for shipping goods from theincreased traffic Of the advantage of thefree trade agreement to they are able to help the Mexican economy are needed to make those investments California already enjoys a do so after NAFTA The effect on California therefore remains in question is the and with the removal of the maquiladoraprovisions these companies and move its operationsfrom California to Salinas' reforms brought about during the s That the stateswhich border Mexico Texas takes full advantage of the loosening oftrade restrictions that in operation and continue in their currentrole of providing support dependon the maquiladoras in Juarez and Monterrey it was during the s that the maquiladoras attention to worker involvement were implemented insome of the maquiladoras competeon a global basis While Mexico is dependent part been responsible for this change NAFTA may replace the businessopportunities have been forged long before the treaty and will economic opportunitiesawaiting these two states NOTES S Herrera Edward Maquiladoras A Breakthrough Martha H How the U NAFTA Journal of Commerce and Commercial March A A NAFTA ManagementReview March Ibid Ibid Martha H Peak NAFTA Boon or Boondoggle Los July Robert Castillo Global Trade New Mexico Kevin G Hall Mexico May Hurt US If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.

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