Tariffs by Alex

     Last week our class learned about international trade. International trade is when countries trade with one other countries. The main objectives for countries are to trade with one another in order to buy products that aren’t sold or made domestically. The imported products might be different from products in their country or it might just be cheaper. We also learned that countries benefit from specializing in products that they can produce more efficiently than other countries.

     I want to talk about tariffs being imposed on certain products from the United States. I found an article from the Calgary Herald called, “Threat of tariffs drawing closer U.S. refuses to budge on meat labeling.” After the first meeting of  NAFTA Agriculture Ministers in Mexico,  Gerry Ritz, the federal Agriculture Minister said Canada is not afraid to set a tariff on certain U.S. products. The United States wants to enforce a country of origin law (COOL). This means meat products exported from the U.S. imported by Mexico and Canada would be labeled on where the animal was born, raised and slaughtered. The meat wouldn’t be labeled on where the animal was sold. Canada and Mexico are opposed on this idea. 

 

 

     Canadians who export their livestock, say that they are losing more than $1 billion a year because of the increased processing and handling costs.

     The Mexican government, as requested by Ritz, is pressuring Mexican companies with its own list of U.S. products that may be tariffed. 

     As a result of COOL, some U.S. meat plants like Cargill packing plant in Texas and National Beef Packing Co. plant in California, were closed because they were accused of minimizing cattle supply from Canada and Mexico. 

     In my opinion, United States is trying to get more money by suggesting this law and by charging Canada and Mexico more for processing and handling costs. I also think that the U.S. is trying to take credit for the animals just because they are born in the U.S. Most of the labor like the slaughtering and selling of the product, is done in Canada and Mexico. To me, Canada and Mexico are justified in setting the tariffs on the United States. 

 http://www.youtube.com/watch?v=sPctpQkot2c 

Works Cited

Stephenson, Amanda. "Threat id tariffs drawing closer as U.S. refuses to budge on meat labeling." Calgary Herald. 21 May 2014. Web. 9 June 2014.  http://www.calgaryherald.com/life/Threat+tariffs+drawing+closer+refuses+budge+meat+labelling/9863780/story.html

What is NAFTA?

The North American Free Trade Agreement (NAFTA) is a the agreement which was signed by Prime Minister Brian Mulroney, Mexican President Carlos Salinas, and U.S. President George H.W. Bush and entered into force on January 1 ,1994 between United Stated, Canada and Mexico. The purpose of the agreement is to create the largest trade block in the world, boost economic growth in the three countries and to raise the standard of living for the people of all three countries to the highest level.

What initiated NAFTA?

In signing the North American Free Trade Agreement January 1,1994, Canada, the US and Mexico intended to create the largest trading block in the world. Canada had two previous trade agreements with the US before entering into NAFTA.

l  Step 1) The Canada-United States Automobile Agreement was signed in 1965. This agreement allowed the duty-free movement of most automobiles between Canada and the US. At that time, Canada’s small populations prevented it from developing a strong domestic automobile industry. By creating free trades with the US, Canada could produce more automobiles and pay workers higher wages.

l  Step 2) A second free trade agreement-FTA(Free Trade Agreement) came into being on January 1, 1989. This agreement

a)     eliminated tariff barriers to trade in goods and services

b)    facilitated fair competition

c)     liberalized conditions for investment

d)    established procedures to resolve disputes

e)     laid the conditions for future bilateral and multilateral trade agreements.

l  Step 3) NAFTA (the North American Free Trade Agreement) came into being January 1, 1994. This agreement superseded the Canada-the US Free Trade Agreement (FTA).

.   This agreement

a)     eliminated trade barriers and encouraged movement of goods and services among Canada, the US and Mexico

b)    encouraged fair competition

c)     increased investment opportunities

d)    protected intellectual property rights

e)     created procedures to administer agreement jointly

f)      established framework to encourage future trilateral, regional and multilateral benefits of agreement.

Impact of NAFTA on Canada

Positive point of view; Mexico is a growing market, and offers Canadian businesses large international markets. Duty-free access to Mexico has allowed Canada to compete with the Unites States duty-free access to Mexico. Both Canada and Mexico are increasing their market share in the US. They have an advantage over nations that are not part of NAFTA. Canadian clothing and furniture industries have increased exports to the US and Mexico. Mexican investment in Canada has tripled. Mexican products now have easier access to Canada than before NAFTA existed.

Negative point of view; Low wages in Mexico threaten Canadian businesses and Canadian jobs. Mexican pollution controls are not as strict as Canada’s. Provincial governments will no longer be able to give preferential treatment to local businesses. Cross-border trade disputes still exist. Will Canadian workers who lose jobs when companies move to Mexico or the US might not find future employment.

NAFTA Promotes Vibrant Trade Relations

The lifting of trade barriers has made it easier for companies to operate across Canadian, United States and Mexican borders.

Success stories

l  Bombardier

Taking advantage of duty-free access to the United States and Mexican borders for automotive parts, Bombardier exemplifies the vibrant trade relations that have developed since NAFTA came into force in 1994.Bombardier has manufacturing plants in Thunder Bay, Ontario; La Pocatière, Quebec, New York State and Pennsylvania,and Sahagun, Mexico. Elimination of trade barriers has made this possible for Bombardier.

l  Mary Kay

The elimination of tariffs under NAFTA and geographical proximity among the North American countries allows for shorter processing times, making business opportunities in the region for direct selling companies like Mary Kay even more attractive. In 2007, Mary Kay Mexico opened a new headquarters and distribution center in the Nuevo Leon region of Northern Mexico. This is good for Mary Kay and Mexican workers.

l  Modelo

As a result of NAFTA, the Mexican beer producer is able to import barley duty-free from the U.S. and Canada. Because of growing Mexican beer exports, domestic barley production has also increased significantly since NAFTA was enacted.

 http://www.naftanow.org/success/default_en.asp

“North American Free Trade Agreement.”NAFTANOW.ORG.the governments of Canada,the United States and Mexico,2 April. 2012.Web.5 June. 2014.

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Video

https://www.youtube.com/watch?v=MA6KvuYB6R4

In my opinion, NAFTA has more positive than negative aspects. In fact it has helps to enlarge Canadian, American, and Mexican trade markets. Since this was the initial goal of forming NAFTA, it is successful. When disputes occur among member countries, the agreement has mechanisms to resolve the disputes. Since globalization of trade markets is occurring all over the world, it is advantageous to Canada, the US and Mexico to make NAFTA work. Other country can also use NAFTA as a model to create their trade agreements. The fact that NAFTA is celebrating its 20^th anniversary, it suggests that it is successful trade agreement.