World Trade

Agreements
 AGENDA
• Identify key components of world trade agreements.
• Summarize the basic terms of agreements
• Determine the economic benefits and consequences of
producers and consumers
• Take Notes on Page 72 of your notebook. You May be
able to use this on the quiz on April 12th/13th
• On This PPT: NAFTA, UN, OPEC, CAFTA
NAFTA: North American Free Trade
Agreement
• Participating Nations:
Canada, United
States, and Mexico
NAFTA North American Free Trade
Agreement

• The goal of NAFTA was to:

• Eliminate barriers to trade and investment between the
U.S., Canada and Mexico.
• The implementation of NAFTA on January 1, 1994 brought
the immediate elimination of tariffs on more than
one-half of Mexico's exports to the U.S. and more than
one-third of U.S. exports to Mexico.
 NAFTA North American Free Trade
Agreement
• Economic benefits to Producers/Consumers:
• Canada received a modest positive economic benefit as measured by
GDP (Gross Domestic Product)
• One of NAFTA's biggest economic effects on U.S.-Canada trade has
been to boost bilateral agricultural flows
• Mexican factories that 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.
• Mexico has provided a growing market for meat for the U.S.,
leading to an increase in sales and profits for the U.S. meat
industry.
NAFTA North American Free Trade
Agreement
• Economic Set-backs
• In the United States, as economist Robert Scott details, NAFTA
has eliminated some 766,000 job opportunities-primarily for
non-college-educated workers in manufacturing.
• Mexico wages, benefits, and workers’ rights are deliberately
suppressed-are isolated from the rest of the Mexican economy.
The workers are paid much less to perform job duties.
•  Canadians saw an upward redistribution of income to the richest
20% of Canadians, a decline in stable full-time employment, and
the tearing of Canada’s social safety net.
NATO: North Atlantic Treaty
Organization
• Participating Nations:
Military or defense alliance
formed in 1949 by 12
countries in Western Europe
and North America
• today there are 28.
• An alliance of nations
with shared values. All
members are democracies.
 NATO Members:
•Albania, Belgium, Bulgaria, Canada, Croatia, 
Czech Republic,
Denmark Estonia, France, Germany, Greece,  H
ungary, Iceland,
Italy, Latvia, Lithuania, Luxembourg, 
Netherlands, Norway, Poland,
Portugal, Romania, Slovakia, Slovenia, Spain, 
Turkey,  United Kingdom, and United States
NATO: North Atlantic Treaty
Organization
• Basic Terms of Agreement:
• Original purpose – to protect its members from a
possible attack from the Soviet Union
• Agreed if one member is attacked, they will all support
and help militarily.
• Has been the most important U.S. alliance for the past
70 years
NATO: North Atlantic Treaty
Organization
• Economic Benefits:
NATO membership not only reduces the chances of
conflict but -- because NATO commits its members to a
free-market economy -- it reduces risk factors like
nationalization and expropriation. Risk-averse foreign
investors, they say, will respond by pumping in more
money.
NATO: North Atlantic Treaty
Organization
• Economic Set-Backs:
• NATO entry will only burden government budgets and
force huge investments in military hardware
UN United Nations
• Participating Members
● 5 permanent members: China, France, Russian
Federation, the United Kingdom, and the United
States,
● 193 out of 195 countries participate (Holy See and
State of Palestine do not)
● Ten non-permanent members elected for two-year
terms by the General Assembly (with end of term
date):
Bolivia (2018)
Equatorial Guinea (2018)
African Group
Ethiopia (2018)
Ivory Coast (2019) Asia-Pacific Group
Kazakhstan (2018) Eastern European Group
Kuwait (2019) Latin American and Caribbean Group
Netherlands (2018) (GRULAC)
Peru (2019) Western European and Others Group
Poland (2019) UN member not in any voting group
Sweden (2018) Non-UN state or territory
Non-Council Member States
More than 60 United Nations Member States have
never been Members of the Security Council.
UN Peacekeepers
UN United Nations
Basic Terms of Agreement:
• to maintain international peace and security;
• to develop friendly relations among nations;
• to cooperate in solving international problems and in
promoting respect for human rights;
• and to be a center for harmonizing the actions of
nations.
UN United Nations
• Economic Benefits:
The UN provides technical assistance and other forms of
practical help to countries around the world.
In cooperation with the UN, they help formulate policies,
set standards and guidelines, foster support and mobilize
funds.
The World Bank, for example, provided more than $59
billion in development loans in fiscal year 2017 to nearly
80 developing countries.
UN United Nations
Economic Set-Backs:
•Because of financial hardships, rich countries are failing to
deliver on pledges. “We cannot afford to create a lost generation
of children who have been deprived of their chance for an
education that might lift them out of poverty.” UNESCO
Director-General Irina Bokova
•Rich countries and international and financial institutions are
exaggerating how much aid they provide to help poor countries
cope with the financial crisis.
OPEC: Organization of the Petroleum Exporting
Countries
• Participating Nations:
The Organization has a total of 12 Member Countries.
Republic of Iran, Iraq, Kuwait, Saudi Arabia and
Venezuela. Later joined by Qatar (1961), Libya (1962), the
United Arab Emirates (1967), Algeria (1969), Nigeria (1971),
Ecuador (1973), and Angola (2007).
OPEC: Organization of the Petroleum
Exporting Countries
OPEC: Organization of the Petroleum Exporting
Countries
• Basic Terms of Agreement:
• OPEC agrees to coordinate and unify the petroleum
policies of its Member Countries and ensure the
stabilization of oil markets in order to secure an
efficient, economic and regular supply of petroleum to
consumers
• a steady income to producers and a fair return on
capital for those investing in the petroleum industry.
OPEC: Organization of the Petroleum Exporting
Countries
• Economic Benefits:
A sharp decline in oil prices benefits oil importing
nations and hurts oil exporters.  
For importers, lower oil prices act similarly as a tax cut,
increasing consumer disposable income.  This allows for
looser monetary policy, and hence lower interest rates
with lower inflation and stronger economic growth (as
in the case of the US).
OPEC: Organization of the Petroleum Exporting
Countries
• Economic Set-Backs
• Sharper oil prices, on the other hand, have been
identified as a major cause in seven out of eight post
WWII recessions in the US.
CAFTA: Central America Free Trade
Agreement
• Participating Nations:
CAFTA was created to expand
corporate rights
to the poorest countries in Central
America
Including: Guatemala, Nicaragua,
El Salvador,
Costa Rica, Honduras, and
the Dominican Republic.
CAFTA: Central America Free Trade
Agreement
Basic Terms of Agreement:
CAFTA immediately eliminates all tariffs on 80 percent
of U.S. manufactured goods, with the remainder phased
out over a few years. Importantly, the agreement is not
limited to manufactured goods, but covers virtually every
type of trade and commercial exchange between these
countries and the United States. It also strengthens
regulatory standards and environmental protections in
Central America & the Dominican Republic and provides
for independent, outside monitoring. 
CAFTA: Central America Free Trade
Agreement
• Economic Benefits:
• Computer, electronic, aerospace, and information
technology products account for over a third of all U.S.
exports to Central America and the Dominican Republic.
• Medical devices and pharmaceuticals, as well as
agricultural products, account for a large share of
American sales to the six countries, as do textiles and
apparel.
• A rapidly growing market is growing even faster
and yielding greater opportunities for U.S. companies 
CAFTA: Central America Free Trade
Agreement
Economic Set-Backs
• Corporations now have more freedom than ever before
to relocate to whatever countries will provide the
lowest wages and the loosest regulations, lowering
their costs to increase their profits.
• The textile and apparel industry has taken advantage of
this new dynamic like few others.
• Loss of jobs for Americans
Trade Organization Symbols
Discussions:
•Why do we need trade regulations?
•What are the benefits and consequences
for consumers and producers?

•How can we as a society improve trade?

NEXT...
• Independently, Take notes on Page 74 of your notebooks for the
two posted materials on TPP and CAFTA:
• TPP Powerpoint by Professor Cielito F. Habito
• EU PPT