CAST 1103H Lecture Notes - Lecture 10: Brian Mulroney, North American Free Trade Agreement, Maquiladora
14 Jun 2018
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• CUFTA
o Canada - U.S. free trade agreement was agreed upon in 1987
o significant for Canada and the US due to the volume of trade between the two
countries
o Became a very publicized issue during the 1988 election.
o Came into effect on January 1st, 1989
• Prime Minister Brian Mulroney
o Leader of the Conservative Party, was originally against free-trade
o pressured by lobbying groups to change his ideals and adopt free-trade
• NAFTA
o Mexico initiates talks with the US, Canada asks to be a partner in the negotiations.
o There was a reluctancy, but there was a desire to access duty-free products and
investments.
o Effective on January 1st, 1994
o Included 2 Developed countries and 1 developing (Mexico)
o One of the largest free trade zones in the world
o Positive Effects
▪ Canada provides technical assistance, defence and intelligence-gathering
▪ Joint action against H1N1 outbreak
o Negative Effects
▪ Cartels and drugs are still an issue for businesses working in Mexico
(correlation)
• NAFTA TODAY
o trade between the 3 nations is 1.1 trillion
o Canadian exports,
▪ automobiles
▪ oil
▪ electronics
o some jobs lost, high-paid, lower-skilled manufacturing jobs lost
o Maquiladora system
▪ foreign-owned factories and plants in Mexico
▪ workers in Mexico have low benefits, pay and rights (not paid very well)
o Mexico has become crucial to Canada's economy and a recession in Mexico can
affect Canada
o The sheer size of the US economy ensures that Canada and Mexico are always in
a weakened negotiating position.
▪ 25 cents out of every dollar of goods exported are actually Made in USA.
• Free Trade
o Movement of goods and services free of tariffs
o Free movement of component pieces across borders, like car parts
o Grew about 12% annual after NAFTA
• Tariffs
o A protectionist cost that can protect a country from the dumping of products in an
unprotected market
o 80% of Canadian shipments already entered tariff free,
• Exports
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