A 

Abortion
Accounting
Advertising
Africa
African-American Studies
Aging
Agriculture
American Indian Studies
Anthropology
Archaeology
Architecture
Argumentative
Art: Artists (Alphabetized)
Art: General
Become an Affiliate and Earn $$$
Biographies (Alphabetized)
Book Reviews (Non-Fiction) (Alphabetized)
Business: Companies (Alphabetized)
Business: General
Business: Industries (Alphabetized)
Business: International
Business: Small
California
Canada
Caribbean
Child Abuse
China
Communication: Journalism
Communication: Language & Speech
Communication: Media
Communication: Non-Verbal
Communication: Television
Communication: Television & Children
Communism
Computer Science
Consumerism
Criminal Justice: General
Criminal Justice: Juvenile Delinquency
Criminal Justice: Police Science
Criminal Justice: Prisons
Cuba
Death & Dying: Euthanasia
Death & Dying: General
Death & Dying: Suicide
Drama: American
Drama: English
Drama: World
Drugs: Alcohol
Drugs: General
Economics: Banking
Economics: Economists (Alphabetized)
Economics: General
Economics: Inflation
Economics: International Trade
Economics: Macroeconomics
Economics: Microeconomics
Economics: Taxation
Education: Administration
Education: Curriculum
Education: General
Education: Higher
Education: Physical
Education: Psychology
Education: Reading
Education: Special
Education: Teaching Methods
Education: Theory
Energy: General
Energy: Nuclear
Energy: Solar
Environmental Studies
Evolution
Family & Marriage
Films: Artists (Alphabetized)
Films: General
Finance: Companies (Alphabetized)
Finance: General
Former Soviet Union: Post-1990
France
Gender & Sexuality
Geography
Germany
History: Ancient Greek & Roman
History: European
History: Great Britain
History: U.S. (After 1865)
History: U.S. (Before 1865)
History: U.S. Presidency
History: U.S. Presidents (Alphabetized)
Homosexuality
Immigration
India
Indonesia
International Relations: Arms Control
International Relations: Cold War
International Relations: Non-U.S.
International Relations: U.S.
Japan
Jewish Studies
Korea
Labor
Latin America
Law: Business
Law: Capital Punishment
Law: General
Law: International & Non-U.S.
Law: Supreme Court
Leadership
Literature, American: Authors (Alphabetized)
Literature, American: Faulkner
Literature, American: Fitzgerald
Literature, American: General
Literature, American: Hawthorne
Literature, American: Hemingway
Literature, American: Melville
Literature, American: Poe
Literature, American: Steinbeck
Literature, American: Twain
Literature, English: Authors (Alphabetized)
Literature, English: Chaucer
Literature, English: Conrad
Literature, English: Dickens
Literature, English: General
Literature, English: Joyce
Literature, English: Lawrence
Literature, English: Shakespeare
Literature, English: Swift
Literature, General: Children
Literature, General: Classic (Greek & Roman)
Literature, General: Russian
Literature, General: World
Management: General
Management: Japanese
Management: Motivation
Management: Theory
Management: Women
Marketing: Companies (Alphabetized)
Marketing: General
Marketing: Plans
Mathematics
Medical: Aids
Medical: Dentistry
Medical: Diseases & Disorders (Alphabetized)
Medical: General
Medical: Nursing
Mexican-American Studies
Mexico
Middle East: Egypt
Middle East: General
Middle East: O.P.E.C.
Military
Music: Classical
Music: General
Mythology
Nutrition
Parapsychology/Occult
Philosophy: Ancient Greek
Philosophy: Descartes
Philosophy: Eastern
Philosophy: General
Philosophy: Kant
Philosophy: Sartre
Poetry: American
Poetry: English
Poetry: Milton
Poetry: World
Political Science: Elections & Campaigns
Political Science: Foreign
Political Science: Lobbyists & Pressure Groups
Political Science: Machiavelli
Political Science: Mill
Political Science: Political Theory
Political Science: U.S.
Psychology: Behaviorism
Psychology: Child & Adolescent
Psychology: Disorders
Psychology: Dreams
Psychology: Experimental
Psychology: Freud
Psychology: General
Psychology: Jung
Psychology: Physiology
Psychology: Piaget
Psychology: Rogers
Psychology: Social
Psychology: Testing
Psychology: Therapies
Public Administration: General
Public Administration: Government Agencies (Alphabetized)
Racism
Real Estate
Recreation & Leisure
Religion: Eastern
Religion: General
Religion: Islam
Religion: The Bible
Research: Completed Studies (With Statistics & Results)
Research: Designs & Proposals
Research: Statistics & Methodology
Russia: Pre-1917 Revolution
Science: Astronomy
Science: Biology
Science: General
Science: Genetics
Sociology: Durkheim
Sociology: General
Sociology: Marx
Sociology: Social Problems
Sociology: Social Theory
Sociology: Social Welfare
Sociology: Weber
Soviet Union: 1917-1990
Sports: Drugs
Sports: General
Technology
Transportation: Automotive
Transportation: Aviation
Transportation: General
Transportation: Railroads
Urban Studies
Vietnam
Women Studies
 

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...

11 Pages / 2475 Words 11 sources, 18 Citations, TURABIAN Format $44.00 Return to List of Papers

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. Can Profit From NAFTA," ManagementReview 82 (March 1993), 11. The ITC has as its goal providing assistance inbusiness expansion to growing markets through networking and workshops.During 1991, New Mexico established a Border Development Program in orderto put New Mexico suppliers on the Juarez maquiladora approved vendor'slist; this represented an entry for New Mexico companies into the estimated$4.5 billion provider's market. Introduced in 1965 after the UnitedStates modified its immigration laws to make seasonal migration foragricultural jobs in California more difficult, maquiladoras were one-halfof a twin plants program. Truckers and railroads also stand to benefit from NAFTA as these arethe traditional routes for shipping goods to and from Mexico. Someanalysts consider that Mexico is one of the few developing countries thatmay become industrialized before the next century.[12] Arizona, with itsemphasis on telecommunications and fiber optics, can take advantage of thatcoming industrialization. Industries whichmight benefit from a complete relocation, such as the apparel industry,have already been in a position to do so under the increased latitude thatPresident Salinas' reforms brought about during the 198 s. Other industries, including textiles, steel, cement, mining,airlines and banking, continue toward privatization. [15]Edward Herrera, "Maquiladoras: A Breakthrough," New MexicoBusiness Journal 15 (March 1991), 59. During the 198 s,management techniques such as quality circles, just-in-time productionmethods and increased attention to worker involvement were implemented insome of the maquiladoras, with the result that the quality level of goodsproduced there markedly improved. [7]Ibid., 7A. At the same time, it is estimated that more than 18 , California jobs are supported by exports to Mexico and Canada, and anestimated 61,3 jobs have been created in the state since 1987. However, Mexican ports are in the process ofbeing privatized, and Veracruz was taken from the control of allegedcorrupt union bosses and given to three stevedoring firms.[18] The widespread privatization of Mexican ports is a double-edged swordfor American companies and the states that have traditionally benefittedfrom trade with Mexico: while the improvement of the Mexicaninfrastructure enhances the attractiveness of doing business in Mexico, italso directly negatively affects the American ports that have been handlingthe cargo. Leading exports to Mexico in 199 were electrical and electronicequipment, computers, industrial machinery and apparel. [13]Pat O'Brien, "Should State Do More To Promote Maquilas?" TheBusiness Journal 1 (July 3 , 199 ), 28. Arizona's high-tech companies in particular should benefit from NAFTAas they are able to help the Mexican economy realize its full potentialduring the 199 s. "Maquiladoras: Where Quality is a Way of Life." Management Review 82 (March 1993), 19-23."State Export Profiles." Business America 113 (June 15, 1992), 16."State Isn't Dependent on NAFTA." Journal of Commerce and Commercial (March 3, 1993), 7A, 9A.Wastler, Allen R. What remains in question is the effect that the dismantling of themaquiladora structure will have on trade between the United States andMexico. As NAFTAresults in increased goods going across the borders, these transportationalternatives will benefit from the increased traffic. This does not create a market for goods, but enablescompanies to restructure their pricing in recognition of reduced tariffs.In addition, the decreased numbers of permits that are required and thelower import duties work to reduce the cost of doing business in Mexicowhich results in a higher number of goods being imported. [8]Susan Futterman, "NAFTA: Boon or Boondoggle," Los AngelesBusiness Journal 15 (May 1 , 1993), S16. American companies would set up a plant in theUnited States which manufactured components; these components were thenshipped across the border to the maquiladora where the labor-intensiveassembly work would take place. In 1991, only 71 New Mexico vendorssupplied goods to maquiladoras out of a total of 25,3 6 American companiesdoing so.[15] Even more startling is the lack of experience that New Mexico has inforeign trade in general, and with Mexico in particular, given the closegeographic proximity. Themaquiladoras have, in large part, been responsible for this change. Instead, apparel industry analysts suggest that thefashion and quality demands make it difficult for companies to relocate toMexico. UnderNAFTA, the maquiladoras will have to prove they can be run as independentprofit centers; currently, parent firms have budged the maquiladoras ascost centers. [16]Castillo, 56. [4]Martha H. At the same time, the state competed with mid-West andwestern suppliers who had long-standing relationships with parent companiesbased elsewhere in the United States. New Mexico's total exports were $214 million in1989, an increase of 11 percent from 1988, but the state ranked 15th amongthe 17 western states in international trade (its exports exceed those ofSouth Dakota and Hawaii). Between 1989 and 1992, more than 5 , California jobs were lostto Mexico and to facilities that support Mexican plants but based outsideof California. Officially, the maquiladora program will end when NAFTA takes effectand eliminates trade barriers between the United States and Mexico. Mexico effectivelyrestructured its economy during the late 198 s. Hall. [17]"NAFTA to Open Export Doors," Journal of Commerce and Commercial(June 15, 1992), 16. Peak, "Maquiladoras: Where Quality is a Way of Life,"Management Review 82 (March 1993), 19. However, the state's fastest growing businesssector, high-tech, may receive an additional boost from NAFTA. "Global Trade." New Mexico Business Journal 15 (March 1991), 56-57.Futterman, Susan. In 199 , a number of maquiladorasbegan opening in Sonora, opposite Arizona, with the result that more than2 were operating by mid-year.[13] While Arizona has benefitted fromsupporting the maquiladoras that are opposite its border, it has notdeveloped the close ties with Mexico that California and Texas have.However, since the maquiladoras' future is questionable under NAFTA, thelack of dependence on the maquiladoras could improve Arizona's standingwith Mexico if NAFTA is implemented. Texas has sought to build and maintain arelationship with Mexico that takes full advantage of the loosening oftrade restrictions that occurred during the 198 s, and the removal ofremaining trade barriers is not likely to affect greatly this state'srelationship with Mexico. "Maquiladoras: A Breakthrough." New Mexico Business Journal 15 (March 1991), 59."NAFTA to Open Export Doors." Journal of Commerce and Commercial (June 15, 1992), 16.O'Brien, Pat. As with California, however, the fate of the maquiladoras is importantto Texas. [1 ]Ibid., S17. These states can take advantage of thefree trade agreement to increase their trade, and their emergingtechnologies should find new markets in the growing Mexican economy. The most immediate change associated with NAFTA is the new rules oforigin. Currently, that islimited to 5 percent; under NAFTA, any amount could be sold in Mexico orelsewhere in Latin America. Currently, up to 35 percent of local components can be usedwithout penalty when goods are repatriated to the United States, underAmerican preferential treatment requirements. NAFTA will also facilitate the movement of goods through customs,much as the European Economic Community (EEC) pact of 1992 facilitatedinter-European transport. Once NAFTA is implemented,there will be no tariff on North American components, but duties will beapplied to components which do not originate in Canada or the UnitedStates. [9]Ibid. The increasein its exports to Mexico is what enabled the state to increase its exportvalue generally.[6] The state continues to aggressively pursue international trade. The North American Free Trade Agreement (NAFTA) seeks to create a tradingbloc consisting of Canada, the United States, and Mexico. While Mexico is dependent on the states that border itfor infusions of capital and know-how, it has also developed a workforceduring the 198 s which can effectively compete in the world economy. Waster and Kevin G. When it was notfeasible to use water routes, overland truck and rail routes have been usedinstead. If the plants remain in operation and continue in their currentrole of providing support to American companies, Texas will not see adecline in its exports to Mexico. The finished piece was then back acrossthe border for distribution and consumption. That thesechanges did not take place at that point suggest that NAFTA will be able tobring them about. As a result of these and other efforts,more than 6 export-related jobs were created in 1989.[14] New Mexico acknowledges that it was slow to take advantage of the$12.6 billion annual market for U.S. [14]Robert Castillo, "Global Trade," New Mexico Business Journal 15(March 1991), 56. These ports best hope is that the improved infrastructure leadsto an increase in activity such that additional cargo is still handled bythe American ports. Texas is likely to feel the least effect of NAFTA of any of the stateswhich border Mexico. Border towns are the most popular sites for these factories in partbecause finished goods can be shipped across the border and distributedthrough the American infrastructure (the distribution facilities in Mexicoare poor). There is general agreement that economic trends that began when Mexicojoined GATT and began removing tariff, duty and permit restrictions arelikely to continue under NAFTA, but because the trends are alreadyunderway, NAFTA will not revolutionize relationships with Mexico.[17] American ports, most notably Los Angeles and Houston, are currentlythe leading points of entry for waterborne commerce heading to Mexico.Shippers and carriers have traditionally avoided Mexican ports because ofcorruption fears, cargo theft and high labor costs. While it is true that labor isless expensive in Mexico than in the United States, the apparel industryhas not yet relocated to Mexico, and could easily have done so through themaquiladora program. "NAFTA Will Boost Arizona High-Tech." The Business Journal 13 (April 23, 1993), 31.Castillo, Roberto. The government has also shifted away from protectionist tactics withregard to its international commerce strategy. [18]Allen R. [2]Ibid. The U.S.Department of Commerce estimates that each $1 billion in exports results in19, new American jobs; since analysts estimate that NAFTA would resultin a trade surplus of approximately $1 billion, more than 19 , new jobscould be created as a result, many of them in California.[8] California's chief concern about job loss is in the apparel industry,which enjoys a high profile in Los Angeles. [3]Ibid., 14. Theagreement is the subject of much controversy over whether American jobswould be lost or gained, and what the eventual affect of the agreement willbe on the American economy. Hall, "Mexico May Hurt US Ports,"Journal of Commerce and Commercial (June 8, 1993), 7A. Bordering states,including Texas and California, should realize significant gains from theincreased traffic. The maquiladoras provide the best example of how Mexico sought tochange its policies during the 198 s. California already enjoys a close relationship with Mexico through themaquiladora program and because of its large Spanish-speaking population.This state has aggressively pursued trade with Mexico in years past, and islikely to continue to do so after NAFTA. In addition,Mexico had a high level of debt (much of it to American financialinstitutions).[1] Under President Carlos Salinas de Gortari, the number of publicly heldcompanies fell from more than 11 in 1982 to just over 2 in 1992.During the same period, the public debt was halved, and inflation fell from15 percent in 1987 to 12 percent in 1992.[2] While still considered highby American standards during a recession, the relatively low rate ofinflation has brought about new credit options and new opportunities in theinternational market. NOTES BibliographyBrown, David M. The Mexican economy requires large investments in itsinfrastructure to meet its goal of becoming an industrialized nation by theyear 2 , and high technology, in the form of telecommunications andcomputer equipment, are needed to make those investments. Brown, "NAFTA Will Boost Arizona High-Tech," The BusinessJournal 13 (April 23, 1993), 31. Prior to that time, thecountry was highly protectionist and socialist, unable to complete on aninternational basis, and heavily reliant on its oil reserves. Until the late 198 s, mostmaquiladoras were established in Juarez or Tijuana, providing benefit toTexas and California, respectively. Such changes are part of Mexico's general economic improvement andrepresent significant change in the way that the country is able to competeon a global basis. The effect on California,therefore, is likely to be less pronounced than the effect on eitherArizona or New Mexico since commercial relationships with Mexico have beenestablished longer in California. Exports to Mexico actually fell in 1989 over1988 by 9 percent.[16] Analysts in New Mexico recognized the importance ofcapitalizing on the relationship with Mexico, but were unsure at thebeginning of the 199 s how best to pursue that relationship. As such, operational budgets do not include corporateoverhead (such as research and development or marketing costs). Arizona's exports were $4.8 billion in 199 , an increase of 18 percentover 1989 and 59 percent greater than in 1987. "NAFTA: Boon or Boondoggle." Los Angeles Business Journal 15 (May 1 , 1993), S1, S16-S17.Herrera, Edward. Texas already enjoys a close trading relationshipwith Mexico through the maquiladoras, and Mexico is the largest tradingpartner that Texas has. Peak, "How the U.S. Arizona has not had the intense maquiladora relationship thatCalifornia and Texas enjoy with Mexico. Duty was paid only on thevalue added in Mexico. Maquiladoras were initially established in order totake advantage of the low labor rates in Mexico.[4] There are currently more than 2,2 maquiladora facilities inoperation employing more than 5 , workers.[5] The plants stretch fromthe Gulf Coast to Tijuana on the Pacific ocean. The following chartillustrates key areas where improvements have been made in reducingprotectionism:[3] Item |1982 |1986 |1989 |1991 | |% of imports requiring permits |1 % |7% |2% |2% | |Import items requiring permit |8, 8 |555 |29 |25 | |Number of tariff rates |16 |11 |5 |5 | |Average import duty |27% |22% |13% |1 % | |Maximum import duty |1 % |5 % |2 % |2 % | |Number of import items |8, 8 |8,2 6 |11,838 |12, | |These measures illustrate that Mexico has made it easier for companies toimport goods. It is unlikely that any one industry will see revolutionary changes;thus it is not probable that a single industry will move its operationsfrom California to Mexico simply because NAFTA passes. NAFTA may replace the maquiladoras with new factories and plants, orthe existing plants may continue in operation. There is another trend in the American-Mexican business relationshipwhich must be taken into account when considering NAFTA: maquiladoras.These are border plants that have traditionally been associated with basicassembly and rough manufacturing work. Can Profit from NAFTA." Management Review 82 (March 1993), 1 -18.----------. "How the U.S. This research seeks to understand the effectof NAFTA on a smaller scale; namely, the effect of the agreement on thosestates which border Mexico. Of the states which border Mexico, NAFTA is likely to have thegreatest effect on those which do not now have a close relationship withMexico: New Mexico and Arizona. [6]"State Isn't Dependent on NAFTA," Journal of Commerce andCommercial (March 3, 1993), 9A. Ports." Journal of Commerce and Commercial (June 8, 1993), 7A.----------------------- [1]Martha H. For the states that borderMexico, the relationships that characterize economic growth and businessopportunities have been forged long before the treaty, and will form thefoundation for any relationships that develop once the treaty is in place.The effect on California and Texas may be negligible, while the effect onNew Mexico and Arizona may be an increase in the economic opportunitiesawaiting these two states. Although some plants have been inplace since 1965, it was during the 198 s that the maquiladoras took rootand began producing large quantities of goods for repatriation to theUnited States and eventual global distribution. In1989, the state Department of Commerce established the Texas Exporters LoanFund, which has funded more than 35 foreign transactions. To understand NAFTA's effect, it is necessary to understand theenvironment into which NAFTA will be implemented. raw materials that the maquiladorasrepresented. The privatization effort continues, although thegovernment retains control of the lucrative national petroleumconglomerate. During 1992, Texas postedoverall growth in export value despite a decline among three of its topfour trading partners (Canada, Japan and the United Kingdom). [11]"State Export Profiles," Business America 113 (June 15, 1992), 16. Raw material is broughtinto Mexico from throughout the world for final assembly, and companies asdiverse as Sony, Mercedes Benz, Nissan and Zenith all operate maquiladoras. and Kevin G. The result of the fund has been increased export activity.The following chart illustrates the level of activity (as measured inbillions of dollars export value) that Texas enjoys with its top fourtrading partners:[7] Nation |199 |1991 |1992 | |Mexico |13 |15 |19 | |Canada |4 |4 |4 | |Japan |3 |4 |4 | |United Kingdom |2 |3 |3 | |In California, concern about the effect that NAFTA will have on jobs runshigh. Arizona's top tradingpartner in 199 was Mexico, which purchased 18 percent of the state's totalexports, followed by Canada, Japan and the United Kingdom. The fundspecializes in loans to small and medium sized businesses that exportproducts composed of at least 25 percent of value from a Texasmanufacturer. In addition, the transportation facilities in Mexico areconsidered to be inadequate to accommodate a mass inflow of Americanindustry.[9] Los Angeles also has the second largest population of Spanish-speakingindividuals in the world outside of Mexico City.[1 ] This creates anatural link between California and Mexico that other states do not have.In addition, California has a highly sophisticated environment technologybusiness sector which can take advantage of environmental restraints thatmay be built into NAFTA. It is estimatedthat in 1987, 76,5 workers in Arizona were involved either directly or ina support role with the state's exports.[11] Arizona does not enjoy the close trade relationship that eitherCalifornia or Texas does. "Should State Do More To Promote Maquilas?" The Business Journal 1 (July 3 , 199 ), 1, 28, 35.Peak, Martha H. If, however, the plants face increasedcompetition in other parts of the country, the many companies that dependon the maquiladoras in Juarez and Monterrey may find that they losebusiness as a result. "Mexico May Hurt U.S. New Mexico established an International Trade Council (ITC),headquartered in Albuquerque, in October 1989 after a conference betweenmembers of the New Mexico business community and members of the Mexicobusiness community. Exports toMexico increased by 32 percent from 1987 to 199 , when they reached $851million. Also, NAFTA removes restrictions as to how muchof a maquiladora's output can be sold in Mexico. [12]David M. Texas does the most trade with Mexico of all of the states: in 1992,Texas was responsible for 46 percent of the nation's trade with Mexico;California was a distant second with 16 percent. A number of companies have facilities in California that supportmanufacturing efforts in Mexico, and with the removal of the maquiladoraprovisions, these companies and their Mexican counterparts are likely toface increased competition from new companies. That Mexico wasable to increase the number of imported goods by 5 percent over 1 yearsbears out the premise that reduced barriers to trade will result in anincreased flow of goods into the target country. [5]Ibid., 2 . The bulk of thetreaty was negotiated by the Bush administration, but it falls to theClinton administration to coordinate its ratification by Congress. Because of the increased traffic to Mexico that NAFTA is likelyto bring with it, Los Angeles and Houston should both benefit in the short-term from the agreement. 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.