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Trade Relationships and Agreements

Trade Relationships and Agreements - Trade Relationships...

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Trade Relationships and Agreements: Extension of Washington Concesnus—movement of Free Trade swept through the Americas o mid 1980s: Argentina and Brazil initiated negotiations for what would ultimately be a four-country partnership including Uruguay and Paraguay o 1990 US and Canada accepted Mexico’s proposal to begin discussions for a free trade area o 1990 US President Bush proposed development of a free trade zone embracing the entire western hemisphere seeking to overcome the painful crisis of the 1980s, leaders throughout LA came to regard “free trade” as an essential part of any long-term solution movement immersed the western hemisphere in process of “regional integration” which entailed the removal of state-imposed barriers to the mutual exchange of goods, services, capital, or persons FTA and establishment of common markets NAFTA o Took effect in 1994—building a bilateral free-trade accord between US and Canada—created one of the 2 largest trading blocs in the world Population of 370 million and combined economic production of $6 trillion by 1992 NAFTA promoted free flow of goods between member countries eliminating duties, tariffs, and trade barriers over a 15 year period NA Late 1980s Mexican president Salinas says Mexico needs jobs o First turns to Europe for investment and jobs—problem was after the wall fell, East Germany opened up for trade and EU had favorable trading with the EU o Mexico turns to US 1991 Mexico is not very democratic Agricultural sector should have been oppressed because not very efficient and unable to compete with US agricultural sector—caused job loss Small scale businesses wouldn’t be able to compete with large US chains Manufacture workers—could benefit but overall make them more dependent on US trade Argument for PRO NAFTA in Mexico: would double benefits because preferential treatment If joined MERCASUR instead might have had less investment and trade because dealing with weaker economies Mexico joined NAFTA :
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Hopes to preserve peace—hoped NAFTA would attract investment, stimulate employment, and provide meaningful opportunity for one million persons entering the job market every year NAFTA offered President Salinas an opportunity to institutionalize and perpetuate his economic reforms o Salinista program of “structural readjustment” became part of an international treaty Mexico was seeking international benediction for its not- quite-democratic regime o Prospects for democratization became a matter of debate Mexico believed NAFTA would provide the country with diplomatic leverage over LA and the rest of the Third world o Links with Canada and US would link Mexico with advanced industrial democracies and leaders of the “first world” o Mexico would serve as a bridge between the developing world and the developed world All of these hopes were upset on 1/1/1994 when NAFTA went into effect:
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