NAFTA
Trading Blocs are a group of neighboring countries that promote trade with each other and erect barriers to limit trade with other blocs.



There are three main important blocs:

* the Western Hemisphere
o In the western Hemisphere, trade barriers have been eliminated due to The North American Free Trade Agreement.
* Western Europe
* Eastern Asia.

NAFTA is an agreement signed by the governments of the United States, Canada, and Mexico creating free trade in North America. NAFTA is a supranational organization: it is a self-governing country that forms international associations for purpose of trade, military assistance, or mutual security. It established a free trade zone throughout Canada, Mexico, and the U.S over the next fifteen years. A free trade zone or export processing zone is a part or parts of a country where tariffs and quotas are eliminated and bureaucratic requirements lowered to attract companies to raise the incentives of doing business there. In simple terms, NAFTA’s core provisions grant foreign investors a remarkable set of new rights and privileges that promote relocation abroad of factories and jobs and the privatization and deregulation of essential services, such as water, energy and health care. NAFTA includes two important side agreements on environmental and labor issues that extend into cooperative efforts to reconcile policies, and procedures for dispute resolution between the member states.

According to the industrial location theory firms select locations for these situation and site factors:

* Wage rates
* Environmental controls
* Access to markets and skilled workers
* Transportation costs

At the same time, global industrial development depends on increased cooperation among different countries. As a result of lower transportation cost, more people have access to more goods at lower prices than in the past. Given this trend, more consumers in MDC’s are increasingly challenged to choose between the purchase of the highest-quality, lowest-cost goods regardless of where they were made, and support for local industries against foreign competitors at any price.

Effects - NAFTA's effects, both positive and negative, have been quantified by several economists. Some argue that NAFTA has been positive for Mexico, which has seen its poverty rates fall and real income rise (in the form of lower prices, especially food), even after accounting for the 1994–1995 economic crisis. Others argue that NAFTA has been beneficial to business owners and elites in all three countries, but has had negative impacts on farmers in Mexico who saw food prices fall based on cheap imports from U.S. agribusiness, and negative impacts on U.S. workers in manufacturing and assembly industries who lost jobs. Critics also argue that NAFTA has contributed to the rising levels of inequality in both the U.S. and Mexico.

1. Trade: Overall, NAFTA has not caused trade diversion, aside from a few industries such as textiles and apparel, in which rules of origin negotiated in the agreement were specifically designed to make U.S. firms prefer Mexican manufacturers. The World Bank also showed that the combined percentage growth of NAFTA imports was accompanied by an almost similar increase of non-NAFTA exports.
2. Industry: Maquiladoras (factories built by U.S companies in Mexico near U.S border, to take advantage of much lower labor cost) which take in imported raw materials and produce goods for export have become the landmark of trade in Mexico. These are plants that moved to this region from the United States, hence the debate over the loss of American jobs. Other sectors now benefit from the free trade agreement, and the share of exports from non-border states has increased in the last five years while the share of exports from Mexican factory-border states has decreased. This has allowed for the rapid growth of non-border metropolitan areas. However, Mexico has lost a quarter million maquiladora jobs since 2000. Many firms are moving to China where wages are only $1 a day instead of $2.

U.S industrialization: An increase in domestic manufacturing output and a proportionally greater domestic investment in manufacturing does not necessarily mean an increase in domestic manufacturing jobs; this increase may simply reflect greater automation and higher productivity. Although the U.S. total civilian employment may have grown by almost 15 million in between 1993 and 2001, manufacturing jobs only increased by 476,000 in the same time period. Furthermore from 1994 to 2007, net manufacturing employment has declined by 3,654,000.

3. Agriculture: From the earliest negotiation, agriculture was (and still remains) a controversial topic within NAFTA, as it has been with almost all free trade agreements that have been signed within the WTO framework. Agriculture is the only section that was not negotiated trilaterally; instead, three separate agreements were signed between each pair of parties. The Canada–U.S. agreement contains significant restrictions and tariff quotas on agricultural products (mainly sugar, dairy, and poultry products); whereas the Mexico–U.S. pact allows for a wider liberalization within a framework of phase-out periods (it was the first North–South? FTA on agriculture to be signed). The overall effect of the Mexico–U.S. agricultural agreement is a matter of dispute. Mexico did not invest in the infrastructure necessary for competition, such as efficient railroads and highways, creating more difficult living conditions for the country's poor. Still, the causes of rural poverty cannot be directly attributed to NAFTA; in fact, Mexico's agricultural exports increased 9.4 percent annually between 1994 and 2001, while imports increased by only 6.9 percent a year during the same period.

NAFTA opponents

# Labor groups
# Environmental and consumer groups
# Religious groups

They argued that NAFTA would launch a race-to-the-bottom in wages, destroy hundreds of thousands of good U.S. jobs, undermine democratic control of domestic policy-making and threaten health, environmental and food safety standards.

NAFTA promoters

* Many of the world’s largest corporations

They promised it would create hundreds of thousands of new high-wage U.S. jobs, raise living standards in the U.S., Mexico and Canada, improve environmental conditions and transform Mexico from a poor developing country into a booming new market for U.S. exports.



Effects of NAFTA

-Economists believe that NAFTA has positive and negative impacts. Many economists believe that NAFTA has been a positive impact for Mexico. NAFTA has helped lower the poverty levels of Mexico and helped rise the income (in the form of lower prices, especially food). Others argue that NAFTA has been beneficial to business owners and elites in all three countries, but has had negative impacts on farmers in Mexico who saw food prices fall based on cheap imports from U.S. agribusiness, and negative impacts on U.S. workers in manufacturing and assembly industries who lost jobs. People also argue that NAFTA has contributed to the rising levels of inequality in both the U.S. and Mexico.

A. Trade
-NAFTA has not caused trade diversion, aside from a few industries such as textiles and apparel, in which rules of origin negotiated in the agreement were specifically designed to make U.S. firms prefer Mexican manufacturers.

B. Industry
-Maquiladoras, which are Mexican factories which take in imported raw materials and produce goods for export, have become the landmark of trade in Mexico. These are plants that moved to this region from the United States, hence the debate over the loss of American jobs. The income in the maquiladora sector has increased 15.5% since the implementation of NAFTA in 1994. Now maquiladoras are increasing next to the border of Mexico and the US.

C. Agricultural
-Mexico's agricultural exports increased 9.4 percent annually between 1994 and 2001, while imports increased by only 6.9 percent a year during the same period. Production of corn in Mexico has increased since NAFTA's implementation. NAFTA has increased U.S. agricultural exports to Mexico and Canada. Large corporations often feel the need to use harsh pesticides on their products to ensure the success of their crops.

D. Environmental
-NAFTA has brought many negative impacts for the environment. The environmental issue is mostly located in Mexico. The border between the US and Mexico has intense industrialization associated with free trade zones and maquiladora industries. This causes major pollution. This area is also known for its poor drinking water, inadequate sewage treatment, mass squatter settlements with deplorable living conditions, exploding population rates, and rapid industrial expansion by industries whose air and water emissions are insufficiently monitored. Also millions of gallons of raw sewage are poured daily into the Rio Grande, the main source of drinking water. This issue is not only located at the border region. The agricultural sectors also face severe environmental problems. Large corporations often feel the need to use harsh pesticides on their products to ensure the success of their crops. However, these pesticides also contain life-threatening poisons that have a profoundly debilitating effect on both the land and the workers. These toxins eventually seep down into the water supply, poisoning surrounding habitats and polluting drinking water.



Excellent Article on NAFTA that explores both sides-
http://en.wikipedia.org/wiki/North_American_Free_Trade_Agreement (external link)