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| Details |
| Case Code: CLIBE017 |
| Case Length: 3 pages |
| Period: -- |
| Pub Date: 2005 |
| Teaching Note: Not Available |
| Subject :Business Environment |
| Price:Rs.50 |
| Organization :-- |
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Effects of NAFTA * |
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| The caselet details the advantages and disadvantages of free trade agreements like the NAFTA. The effects of NAFTA on the US, Canada, and Mexico are also covered. |
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Issues: |
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- Devaluation of the Mexican currency.
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| Introduction |
The North American Free Trade Agreement (NAFTA) came into force on January 1, 1994, to promote trade between Mexico, the US, and Canada. The formation of NAFTA led to the lifting of trade barriers between the three countries. Under NAFTA, Mexico reduced its trade barriers on U.S. exports significantly and dismantled a variety of protectionist measures and regulations, while the United States, which started with much lower tariffs, made only slight reductions.
After the enforcement of NAFTA, many US companies made long-term investments in Mexican factories and businesses. There were also some short-term, speculative investments in the Mexican stock market because of NAFTA.
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| Questions |
1. What is economic integration? Examine the effects of NAFTA on the United States and Mexico.
2. Discuss how the free trade agreement benefited USA, Canada, and Mexico.
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Keywords |
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North American Free Trade Agreement (NAFTA), the peso, Mexican economy, Canadian economy, US economy
* This caselet is intended for use only in class discussions.
** More comprehensive case studies are priced at Rs.200 to Rs.700 (US $5 to US
$16) per copy.
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