NAFTA is a very important free trade
area made up of developed and developing countries.
It is a free trade agreement formed
between USA, Canada and Mexico. This makes
the entire North America as a giant free - trade area.
This free trade agreement between
USA, Canada and Mexico is very peculiar USA and Canada are developed nations
where as Mexico is a developing nation.
The labour cost in Mexico is very cheap when compared to labour cost of
USA and Canada. Moreover, the working
condition is also very poor in Mexico.
This gave USA and Canada fear of losing more jobs to Mexico due to less
wages. In order to prevent this loss of
jobs from Canada to Mexico, labour standards and Environmental standards were
introduced in NAFTA. In fact NAFTA is
the only free trade agreements which has a very high labour and environmental
standards.
The potential benefits and harmful
effects of NAFTA among its members are many.
There was a substantial exodus of jobs from USA and Canada to low wage
Mexico. Apart from this, USA very intelligently shifted most of their polluting
industries to Mexico.
The Mexicans were also equally
benefited by NAFTA. Foreign Investments
in Mexico has risen substantially since the agreement. Companies from outside NAFTA have been making
large investment in Mexico. Once these
companies establish trade links with Mexico they can explore and utilise the
huge NAFTA market through Mexico.
After NAFTA, Industries in Mexico
started experiencing tough competition from USA and Canadian Industries. This became an indirect stimulant for Mexico
to boost up the standard of their industries equivalent to the standard of industries
as found in USA and Canada.
The
Southern Common Market or MERCOSUR – (Mercado comundel Sur):
The southern common market was
formed in 1991. It consists of
Argentina, Brazil, Paraguay and Uruguay.
Mercosur is the third largest customs union. The main aim of Mercosur is to transform the
bloc into a common market. A common
currency very similar to that of Euro may be adopted later. The Mercosur blocks links 210 million people
who produced more than one trillion in goods and services in 1999.
