ECONOMICS
TRADE EXCHANGE AND INTERDEPENDENCE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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the United States, Canada, and Mexico
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members of the World Trade Organization
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the United Kingdom, France, and Germany
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all of the most favored nations (MFNs)
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Detailed explanation-1: -NAFTA allows your company to ship qualifying goods to customers in Canada and Mexico duty free. Goods can qualify in several ways under NAFTA’s rules of origin.
Detailed explanation-2: -In short, NAFTA created a large free-trade zone reducing or eliminating tariffs on imports and exports between the three participating countries (the U.S, Mexico, and Canada). Overall, there was an increase in trade between the three countries, and real per-capita GDP also increased slightly.
Detailed explanation-3: -Foreign investment increased greatly following the passage of NAFTA, with billions of dollars yearly being invested in Mexico. This foreign investment manifested in an increase in manufacturing as a share of Mexican exports, with exports to the United States increasing to 88.66 percent of Mexican exports by 2001.
Detailed explanation-4: -Mexico’s Farmers Were Put Out of Business 6 When NAFTA removed trade tariffs, companies exported corn and other grains to Mexico below cost. Rural Mexican farmers could not compete. At the same time, Mexico reduced its subsidies to farmers from 33.2% of total farm income in 1990 to 13.2% in 2001.