Nafta: For Trade

             world country. The major difference between a Free Trade.
             Area and Common Market is that a Free Trade Area primarily.
             deals with trade, while a Common Market has this in addition.
             to no barriers on factors of production and a common.
             external trade policy. While on the surface it seems that a.
             free trade area would always be a good thing, it is easier.
             said then done. The majority of people that oppose NAFTA do.
             so because of the potential for loss of employment. Mexico.
             with its cheap work force, will tend to make manufactures.
             requiring extensive manual labor more likely to move to the.
             lower cost area. A loss of sovereignty may also be a.
             stumbling block, since some economic policy decisions are.
             taken out of the governing bodies hands. Another factor is.
             the extent of trade creation versus trade diversion. The.
             difference is if high cost domestic producers are replaced.
             by low cost producers within the trade area then trade.
             creation occurs. If trade diversion occurs, it would have a.
             major impact on consumer prices. .
             In 1988, the United States and Canada agreed to enter.
             into a free trade agreement. This went into effect on.
             January 1, 1989 and was widely accepted as a logical course.
             of action. Canada is a highly developed nation and has a lot.
             in common with the United States. Its per capita income and.
             hourly wages are equivalent to the U.S. and has long been.
             considered our brother to the north. Then in 1991, Mexico.
             entered into talks with Canada and the United States that.
             concluded on 17 December 1992. The treaty was ratified and.
             came into effect on 1 January 1994. The treaty called for.
             the elimination of all tariffs between the three nations.
             over a ten year time span. .
             Just after the new year, the peso was allowed to be.
             floated against the dollar causing up to a 40% loss in the.
             value of the peso. This caused 12% of Mexico's Foreign.
             Direct Investment to leave the country. The United States,.
             which holds more than half of all direct investments in.