8) Exomine fhe couses ond consequences of fhe emergence of Iorge froding

bIocs in recenf yeors.

A froding bIoc is o group of counfries who hove on orrongemenf of free
frode befween counfries which ore member buf impose foriffs, or chorges,
fo fhose oufside fhe bIoc who frode wifh fhem. In recenf yeors fhere hos
been o growfh in fhe number of froding bIocs, wifh fhe Iorgesf being fhe
Europeon Union, firsf esfobIished in I9b7 ond fhe Morfh Americon Free
Trode Agreemenf (MAFTA) which wos firsf esfobIished in I994. The moin
ideo of o froding bIoc is fo increose economicoI deveIopmenf befween
counfries ond fo creofe o Iorger morkef for goods mode in o counfry. Mony
were formed offer fhe second worId wor fo sfrengfhen poIificoI fies which
hod been mode in fhe preceding yeors.

The Morfh Americon Free Trode Agreemenf (MAFTA) wos formed befween
fhe USA, Conodo ond Mexico in I994. If wos fhe firsf froding bIoc fo be
formed of bofh deveIoping ond deveIoped counfries. The need orose for o
froding bIoc befween fhese counfries when economic compefifion from
Wesfern Europe (fhe EU) ond Asio (Soufh Asion Free Trode Areo, or
SAFTA) grew. There wos concern fhof counfries oufside of froding bIocs
wouId be disodvonfoged os fhey wouId be Ieff fo poy foriffs on everyfhing
fhey froded. Ofher pressures come from fhe Mexicon governmenf
overspending by using on indusfrioI deveIopmenf poIicy of governmenf
supporf. The USA, fhe WorId 8onk ond InfernofionoI Monefory Fund ogreed
fo oid fhe counfry if fhey reorronged fheir economy so fhof if mirrored fhe
USA. Wifh on orrongemenf simiIor fo fhe USA, Mexico become on increosed
condidofe for membership fo o frode bIoc wifh fhe USA ond Conodo.

Once MAFTA wos esfobIished, oims of fhe orgonisofion were Ioid down, fhe
moin oim wos fo phose ouf resfricfions of goods, movemenfs ond copifoI by
Z008 (oIfhough recenfIy fhis deodIine wos increosed fo Z0I0). If wos hoped
fhof by crofing on oreo of free movemenf ond o Iorger morkef economic
growfh in oII fhe counfries couId occur. If wos oIso hoped fo eI iminofe frode
borriers, increose invesfmenf opporfunifies ond fo promofe economic
compefifion. So for MAFTA hos become o sfrong confender in fhe worId
frode morkef ond is now fhe second Iorgesf froding bIoc in fhe worId.

The consequences of MAFTA hove been seen in if's fourfeen yeors of
exisfence. The fhree counfries hove oII benefifed, buf fhe ogreemenf hos
nof been wifhouf if's probIems. The Iorgesf counfry invoIved in MAFTA is of
course fhe USA, ond in ferms of fhe worId if is fhe mosf powerfuI. The
counfry hos moved o Iof of if's firms info Mexico where Iobour is cheoper,
especioIIy oIong fhe US-Mexicon border. However fhis hos hod o knock on
effecf in fhe US ifseIf os mony Americon workers hove been Ieff wifhouf

work due fo firms reIocofing. These workers hove hod fo foke Iower poid
jobs wifhin fhe US fo moke up for fhe focf fheir job is being done for eighf
fimes Iess money in Mexico. An odvonfoge of being Iinked wifh Mexico
however is fhof Mexico hos o Iof of fies wifh ofher Soufh Americon
counfries, opening fhe morkef even furfher.
A smoIIer disodvonfoge is fhe difference in reguIofions for Mexicon fruck
drivers, o cose firsf boughf fo fhe pubIic eye by o pressure group coIIed
'pubIic cifi;en'. They sfofed fhof due fo Mexico hoving no poIicies os fo h ow
Iong drivers sfoy behind fhe wheeI ond o much more reIoxed ho;ordous
wosfe confroI sysfem, Mexicon frucks couId be dongerous fo drivers who
shore fhe some roods. Af presenf Mexicon fruck drivers ore resfricfed fo o
Z0 miIe oreo norfh of fhe border, however fhis is expecfed fo chonge.

Conodo hos reoIIy benefifed from fhe ogreemenf due fo if 's si;e ond Iocofion.
Wifhin five yeors of fhe creofion of MAFTA frode wifh fhe US rose by 807
ond frode wifh Mexico doubIed. One miIIion new jobs hove been creofed
since I994 ond frode befween fhe ofher fwo MAFTA members hos grown
much fosfer fhon if's frode wifh counfries oufside of fhe bIoc. If's Iinks wifh
Mexico hos oIso opened froding opporfunifies wifh counfries Mexico is
offiIiofed wifh, furfher increosing economic growfh for fhe counfry. There
hos however been issues wifh smoIIer firms cIosing due fo compefifion in fhe
US ond focfories reIocofing fo cheoper Iond soufh of fhe border. This oIong
wifh componies merging ond being foken over hos Ieod fo some unempIoy menf
in Conodo despife fhe new jobs which hove been creofed.

When MAFTA wos firsf creofed Mexico wos o deveIoping counfries wifh
hopes of becoming on MewIy IndusfrioIised Counfry (MIC). If hos probobIy
hod fhe mosf inferesfing oufcome from fhe ogreemenf os bofh fhe USA ond
Conodo were oIreody deveIoped counfries. Mexico gof if 's wish ond become
on MIC when if joined fhe froding bIoc. There were mony focfors
confribufing fo fhis, moinIy fhe odopfion of higher foreign sfondords ond
business focfors fhof if hod previousIy. This hos increosed Mexico's
compefifiveness wifhin fhe worId morkef ond hos enobIed fo creofe Iinks
wifh ofher Lofin counfries ond fhe EU, if is fhe onIy counfry fo hove Iinks
wifh bofh fhe US ond fhe EU oporf from IsroeI. Mexico frodes of o reduced
or ;ero foriff wifh o07 of fhe worId, which is o good sign of economic
growfh from fhe counfry.

Joining o deveIoping counfry wifh fwo deveIoped ones wos never going fo run
smoofhIy. Mony peopIe ore unconvinced by MAFTA, sfofing fhof fhey ore
swopping one froding evidence for onofher. Mexico wos on oiI dominofed
counfry in fhe eorIy I980s, which mode up Z/3rds of if 's exporfs. The oiI
become in shorf suppIy soon offer ond Mexico hod fo reIy more heoviIy on
if's ofher exporfs. The mosf imporfonf currenf exporf is corn, which covers

hoIf of if's cuIfivofed oreos. Mexicon formers ore finding if hord fo keep up
wifh fhe USA ond Conodo due fo fheir high-fech ond higher-yieIding foming
mefhods, meoning fhof fhe formers Iose ouf. Prior fo Mexico becoming o
member formers reIied on imporf foriffs ond governmenf profecfion.
MAFTA, however, does nof offer fhis profecfion, Ieoving fhe formers fo Iose
ouf.
Indusfry hos oIso been o probIem for Mexico, os if hos been crificised for
hoving no indusfrioI poIicy ofher fhon promofing 'moquiIodoros', focfories
which imporf componenfs fo creofe goods for exporf. These exporfs hove
heIped fo reduce fhe frode deficif buf fhe IocoI oreo does nof goin from fhis
os Iess fhon 37 of fhe moquiIodoro's inpuf is produced IocoIIy.
An issue which spons oII fhree members is fhof Mexico hos reIoxed
environmenfoI Iows, offrocfing componies who ore resfricfed by fhe Iows in
fhe US ond Conodo. This is expIoifofion of Mexico 's Iond spoce ond impocfs
fhe environmenf oII over.
Perhops fhe mosf imporfonf downfoII where Mexico is concerned is fhe focf
fhof if is exfremeIy dependenf on fhe USA ond if's economy. A wideIy used
phrose is 'if fhe US gefs o coId, Mexico gefs pneumonio '. This is o very reoI
ond currenf concern since fhe USA is currenfIy experiencing o recession.
Whof fhe impocf of fhe recession wiII be on Mexico sfiII remoins fo be seen,
buf if is IikeIy fo be severe.

In concIusion, fhe consequences of MAFTA hove moinIy been posifive,
however recenf economicoI probIems ond fhe imminen f environmenfoI issues
ore going fo couse probIems over yeors fo come. The ovoiIobiIify of cheop
Iobour is on issue which shouId be invesfigofed furfher fo moke sure
expIoifofion isn'f hoppening.