What are some business that moved thier factories down into Mexico?
What types ofbusiness activities did a corporation's have/use in a foreign host country.?
What are some of the comparative advantages for the companies to operate in the host country?© BrainMass Inc. brainmass.com March 21, 2019, 12:06 pm ad1c9bdddf
FIRST OF ALL LET US KNOW WHAT IS NAFTA
NAFTA is a comprehensive agreement to liberalize trade in goods and services, remove barriers to investment, strengthen the protection of intellectual property rights; and establish a framework for further trilateral cooperation. It is a complicated agreement, with 24 chapters totaling about 1,000 pages of small print, including a number of special provisions for particular sectors. But the myriad provisions can be summarized in terms of two broad principles that cover virtually every aspect of trade among its three members. Non-discriminatory treatment and transparency provide the certainty and predictability that are a prerequisite of any significant expansion of business.
The member countries of the North American Free Trade Agreement (NAFTA) form the world's largest trading bloc, with a gross domestic product (GDP) of US$11.4 trillion, or one third of the world's total GDP.
ACHIEVEMENT OF NAFTA
(BENEFITS TO US AND OTHER NAFTA COUNTRIES)
The most basic achievement of the NAFTA is the permanent elimination of all tariffs among the three partners according to a phase-out schedule that lasts 15 years, that is by 2008. However, only the most sensitive products are subject to a long phase-out. All bilateral tariffs between the United States and Canada were finally eliminated in 1998. With regard to U.S.-Mexican trade, more than half of both U.S. and Mexican exports to each other became duty-free at NAFTA's entry into force in 1994; Today, 99% of these products are now duty-free.
Trade among the three NAFTA nations expanded quickly, more than doubling between 1993 and 2002. At the end of last year, U.S. two-way trade (merchandise exports plus imports) with its NAFTA partners amounted to more than $600 billion, or about $1.6 billion each day. Trade growth was particularly strong between the U.S. and Mexico, almost tripling from $81 billion in 1993 to $232 billion in 2002. Mexico has edged out Japan as the United States' second largest trading partner after Canada. Canada and Mexico together take 37% of all world-wide US exports and supply 30% of all US imports.
NAFTA fosters the confidence required to make long-term investments and partnering commitments. In 2001, the latest year for which comprehensive UN data are available, the total inflow of foreign direct investment into North America amounted to $152 billion, almost triple the amount that flowed into the area in the pre-NAFTA year of 1993.
In sum, the effect of NAFTA has been the gradual shift of capital, technology and labor toward more productive uses, resulting in substantial increases in productivity and increasing standards of living over the longer run in all three countries.
THOUGH THERE HAVE BEEN ACHIENVMENTS BUT THERE HAVE BEEN MANY CHALLENGES,
While G. Bush Sr. was in favor of NAFTA and free trade, his son (also in favor of free trade) decided in March 2002 to impose very heavy tariffs on steel imports. In December 2003 GWB decided to eliminate the steel tariffs, but new tariffs on other products such as textiles, TV sets and others were decided. What do you think of these series of decisions?
The major reason behind it is that to protect the domestic industries AND REDUCE JOB LOSSES, which is ...