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NAFTA and Mexican Trucking

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The case explores the implications of regional economic integration for various groups. Under the North American Free Trade Agreement (NAFTA), Mexican truckers were to have been allowed to drive their trucks directly into the United States and avoid the costly and time consuming border unloading and loading that took place prior to the agreement. However, fearing job losses in the industry, the U.S. Teamsters Union rigorously opposed the legislation. Although the group ultimately lost its fight, the United States still did not give Mexican
truckers freedom to deliver their goods, prompting Mexico to institute retaliatory measures affecting $2.4 billion of goods exported from the United States. Discussion of the case can revolve around the following questions:

QUESTION 1:What are the potential economic benefits of the trucking provisions in the NAFTA treaty? Who benefits?

QUESTION 2: What do you think motivated the Teamsters to object to the trucking provisions in NAFTA? Are these objections fair? Why did Congress align itself with the Teamsters?

QUESTION 3: Does it make economic sense for the United States to bear the costs of punitive tariffs as allowed for under NAFTA, as opposed to letting Mexican trucks enter the United States?

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The potential economic benefits are cheaper transportation and less time for shipping products, especially those that are subject to damage or time sensitive for use. The amount of loss from ruined produce can devastate growers and suppliers along with the stores that depend on fresh food to sell. Every component along the supply chain and every consumer that buys products from Mexico saves when the system is simpler and more consistent.

The Teamsters issues are twofold. They have many workers that would be out of work or have work cut by allowing ...

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The solution discusses NAFTA and Mexican trucking.

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Global Economics in Mexico after NAFTA

Scenario: Acme Automotive is one of the major US producers of automobiles in Mexico. You have been sent to the Acme automotive plant in Nuevo Laredo, Tamaulipas, Mexico as the new Operations Manager to respond to recent declines in employee morale, productivity, and cost effectiveness at the Nuevo Laredo plant in the past 12 months. Talk of union organizing is of utmost concern to your supervisor in terms of short run and long run costs of production. Your job is to investigate the productivity/cost effectiveness problem and make recommendations to top management for goals and strategies in line with the Acme Vision.

Your first day at the job, you receive the following letter from a disgruntled employee:

(Note- the 'Maquiladoras' to which the writer refers, is the word for companies that process Mexico-imported components, then export them.)

Dear Sir:

I've been working in Maquiladoras since I was 20 years old, and now I'm 27. I've gotten more and more worried, because my job is ruining my health and I have no way out.

Now I work at Acme, where I've been for about a month and a half. "You could say it's forced labor, considering how the foremen talk to the workers and how much psychological pressure they put on people. We work an average of 14-15 hours a day. There's no transport service to and from work, and we get off the shift at 4 o'clock in the morning. Usually we have to wait until 7 AM before we can catch a public bus. And when a bus does come, getting home costs 20 pesos. That makes a very big dent in your take-home pay - 380 to 400 pesos a week ($40-43).

My job is bending steel cables...which are about a centimeter thick, and I have to bend about 3500 a day. Because of what's passing through my hands every day, I can hardly sleep at night - the pain is so bad. Then I have to get up in the morning to do it again. In the future, I know that I can get carpal tunnel problems, which is a very scary idea. I've asked to change to another position, but no one wants to change because whoever works in this job gets a lot of pain in his wrists.

I feel that in three or four years my hands are going to be useless. I've been thinking that I'll have to get another job. What else can I do? They say work in the Maquiladoras is the best paid work here in the city. But there's not much difference from one factory to another.

This is all just normal - the standard. Really, I'm living my whole life in the factory. Because of the time and money pressure, I have no ability to develop myself even as a worker, much less as a human being."

After I had been working in Acme for a month, I went to my supervisor with my concerns about health and safety problems at the plant. He told me that I was putting the Maquiladora workers in danger by making waves. I know that the company's goal is to cut production costs and increase the profits from the engines we produce, but I am hoping you will consider the plight of the poor Mexican workers. I am hoping you will see through our eyes as well as from the eyes of the company officials.

Yours truly,

Enrique Santiago

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***Deliverable Length: 4-5 pages, proper APA formatting, list all reference cited sources.

Details: You are laying the groundwork for Acme's deployment of key lead operations managers and top level personnel to international manufacturing plants. As such, one expectation the company has for you is that you will research and write relevant economic white papers for the pre-orientation of future deployed employees.

Write a 4-5 page white paper which will help employees understand the economic experience of Mexico since NAFTA. Issues you may want to cover include, but are not limited to, trade liberalization, national sovereignty, worker rights, World Trade Organization and committees, relationship with World Bank and IMF, types of economic development.

References:

World Bank Group. Global development finance 2001. Retrieved January 7, 2004, from http://www.worldbank.org/prospects/gdf2001/vol1.htm

World Bank Group. (2001). Mexico - A comprehensive development agenda for the new era. Retrieved January 7, 2004, from http://wbln0018.worldbank.org/External/lac/lac.nsf/Publications/9364AB8A25BABD6085256A4C004B3963?OpenDocument

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