Question

• Respond to each short answer question using two to three well-constructed paragraphs (150 – 250 words) containing specific details and examples that support your understanding of the concepts.

1. What are the benefits of international free trade? Do all parties gain if there is free trade between countries? Use the trade between the US and Mexico to explain your answer.

Answer 1

The free trade among the countries - Mexico and U.S. have increased the competitiveness and wealth, delivering real gains to families, farmers, suppliers, workers, and consumers. It increased the new export and investment opportunities in both the countries. It fundamentally reshaped the economy by providing new employment opportunities for its increasing workforce and discouraging illegal migration from Mexico. Free traded helped automotive industry in U.S. by contributing cross-border supply chains to the development with reduction in costs and increasing the productivity of U.S. auto sector. The agreement gave a huge boost to Mexican farm exports to the U.S. It helped Mexico in reducing the public debt, stabilized inflation, introducing a rule of balanced budget and built up the foreign reserves. However the agreement exposed farmers in Mexico especially corn producers, to competition with huge subsidized agriculture in U.S.

The job migration as allowed with trade suppressed wages. The Local farmers of Mexico found it difficult to compete with the subsidized prices. Furthermore it degraded the environment in Mexico to keep costs low. The forced jobless Mexicans illegally crossed the border. The unions in U.S. lost leverage. For free trade to occur, it should make both countries better off