Unit 4 - NAFTA - Trade Blocs

Question 1

Which countries are members of the NAFTA?

Answer 1

• Canada
• USA
• Mexico

Question 2

What does NAFTA stand for?

Answer 2

• North American Free Trade Agreement

Question 3

What was the original aim of the NAFTA?

Answer 3

• came into effect to create one of the largest free trade zones - to create strong economic growth

Question 4

What are the aims of the NAFTA?

Answer 4

• to promote the conditions of free competition in order to increase market access and investment opportunities within the free trade area

Question 5

What are the benefits of the NAFTA?

Answer 5

• between 1993 & 2017 trade quadrupled between members - from $297billion to $1.27trillion
• boosted economic growth, profits and jobs e.g. USA farm exports to Mexico and Canada increased by 156% and 5 million new jobs were created
• lower tariffs reduced import prices
• USA FDI to Canada and Mexico tripled

Question 6

What are the disadvantages of the NAFTA?

Answer 6

• jobs were lost - since labour is cheaper in Mexico , many manufacturing industries withdrew part of production from the high cost of the USA
• Mexico lost 1.3 million farm jobs - when NAFTA removed farm tariffs, companies exported corns etc. to Mexico below cost (Mexico farmers couldn’t compete)
• Mexico’s environment destroyed - farming pressure caused farmers to use fertilisers and other chemicals

Question 7

What is a trade bloc?

Answer 7

• a type of intergovernmental agreement where barriers to trade (tariffs and others) are reduced or eliminated among the participating states