Question

The 1995 North American Free Trade Agreement provides for two-way, long-haul trucking across the U.S.-Mexican border. U.S. truckers have objected, arguing that the Mexican trucks don’t have to meet the same environmental and safety standards as U.S. trucks. They are concerned that the combination of these lower fixed costs and lower Mexican wages will result in Mexican drivers taking business from them. Their complaints have delayed implementation of this agreement (except for a small pilot program during the Bush administration, which was ended during the Obama administration). What would be the short-run and long-run effects of allowing entry of Mexican drivers on market price and quantity and the number of U.S. truckers?

What is NAFTA? Go on the Internet and find out and then summarize in 1/2 (Half a page) the general provisions of NAFTA and its expected costs and benefits to the American consumer

Though many argue and agree that free trade is beneficial to trading partners, why are US labor unions opposed to this trade agreement (NAFTA)?

Do you agree or disagree with those who oppose this trade agreement?

Answer 1

Assume that prior to the entry of mexican truckers that the trucking industry is a long run equilibirium.

If mexican truckers enter the industry, when the market returns to long run equilibirium, the market price will decrease, the market quantity will increase , each individual trucker's output will increase , and the number of U.S truckers in the industry will be unchanged.

Allowing mexican truck services entering the US market means people have an alternative choice when they deciding truck services. In short run, people will prefer cost less will using the mexican trucks.In long run , the demand for US trucks will decrease due to the higher cost campare to the mexican trucks.

NAFTA ;- The North American Free Trade Agreement is a tradfe agreement. It is between mexico, the united states and canada. It removed taxes on products traded between the united states, canada and mexico. It also protects the copyrights, patents and trademarks between these countries.

Provisions of NAFTA

Tarrifs - NAFTA eliminates tarrifs on U.S, Mexican, and Canada. many will removed immediately othe take time of 5,10,15 years.

Rules of origin- Only goods produced in North america qualify for NAFTA treatment. Rules of origin define goods eligible for NAFTA treatment and prevent free riding by third countries.

Customs- NAFTA expands and improves on procedures in the U.S-Canada FTA and provides for uniform regulations to ensure consistent rules of regulation.

National Treatment- NAFTA reaffirms GATT principles preventing discriminitions against imported goods.

Government- It opens new procurement markets in mexico, particularly the heavy electrical, petrochemical.

BENEFITES OF NAFTA

• Created jobs
• Lowered prices
• Increased economic growth

IT can benifits consumers , who can have access to less expensive and higher quality foreign goods and who can see prices decrease as governments reduce or eliminate tarrifs.

Others argue that true free trade doesnot require any complicated traties amoung government or political entities and the benefits of trade can be easily reaped bysimply eliminating trade restrictions.

yes, I agree with the oppose with rhe trade agreement . as the trade aggrement has many limitations .