MGMT E-170 - Case Analysis - NAFTA

MGMT E-170 - Case Analysis - NAFTA - MGMT E-170 Monday...

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MGMT E-170 Monday 5:30PM - Anthony P. Hussey Case Analysis Category B -- NAFTA In the aftermath of World War II, having been convinced that the horrors of war were due at least in part to the isolationist economic policies of the 30's, a number of multilateral institutions and agreements were developed, the most significant of which is The General Agreement on Tariffs and Trade (GATT), the IMF and the World Bank. Article XXIV of GATT allowed countries to form regional trading zones or preferential trading arrangements to further reduce in-zone tariffs below Most Favored Nation (MFN) rates. Subsequent to the success of these globally oriented agreements, a number of regional agreements were reached as well, the first of which was the European Community (EC). Others include the Asia-Pacific Economic Cooperation forum (ApEC), the European Economic Arena (EEA), and the Southern Cone Common Market (MERCOSUR). Finally, on December 17, 1992, the USA, Canada and Mexico signed the North American Free Trade Agreement. With most tariffs eliminated (when fully implemented), NAFTA would create the largest free trade zone in the world. Estimates of NAFTA's impact varied, however, from 1950 to 1975 the volume of world trade rose by 500% and tariffs fell from in aggregate 60% to 4% and c apital flows slowly rose so that by latter 1980s FDI grew at average of 24% per year and exceeded $200 billion by 1990. Built on foundation of 1988 U.S.- Canada Free Trade Agreement NAFTA added 93 million people in Mexico and deepened subject matter of the earlier agreement to include phased reductions of non-tariff barriers and gradual economic regulatory convergence in addition to investment rights and intellectual property agreements. Case Studies: Three case studies highlight some of the impacts of NAFTA as seen by different industries and companies. One was that of a U.S. company, Iowa Beef Processors (IBP). In 994 IBP export revenues were $1.5 billion and IBP was 26 th largest exporter in the U.S. and the largest processor of beef and pork in the world. After NAFTA's implementation in 1994, IBP bought Lakeside Farm Industries, the second largest meat processor in Canada, and began talks with Grupo Gigante in Mexico, the third largest supermarket chain there. IBP gained access to
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MGMT E-170 - Case Analysis - NAFTA - MGMT E-170 Monday...

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