Before canada signed the north america free trade agreement...

Before Canada signed the North American Free Trade Agreement (NAFTA), a fierce public debate took place. Some economic actors were going to gain from the agreement, while others stood to lose. Associate each economic group below with their expected outcome from NAFTA (Gain, lose, neither): - Workers in the auto industry - Consumers - Hair salon owners - Exporters of niche products only produced in Canada - Workers in the manufacturing industry

Transcript

00:01 So here we're thinking about nafta and we're thinking about how trade will create winners and losers.

00:05 And trade always creates winners and losers because we know there are gains from trade, but for there to be gains from trade, the methods of production have to change, right? if nothing changes, there won't be any gains.

00:15 So gains from trade presume changes and changes hurt some people and help others.

00:21 And the basic principle i'm going to appeal to is for trade, if when you join the trading block, if the stuff that you do is common, or can be done by lots of other people inside the block, it's probably going to become less valuable.

00:37 But if the stuff that you do is rare or cannot be done by many other people in the block, then you're probably going to be better off, right? by and large.

00:49 So auto workers.

00:50 Auto workers in canada were clearly worse off via mexican competition, right? right.

00:59 Mexicans are just as capable as canadians of putting cars together.

01:05 It is not a particularly high -skilled job.

01:07 It does not require university education.

01:11 And so mexican auto workers competed with canadian auto workers inside nafta, which made canadian workers worse off, right? they couldn't demand wages because the auto firms could say, well, you are going to be threatened by by mexican competition.

01:28 Consumers are largely better off, right? and they're largely better off by lower prices, right? when trade opens up, companies are going to locate production in the lowest cost areas that they possibly can, right, over time.

01:46 If you believe in any degree of product market competition, that relocation of costs and that increased degree of specialization and, you know, the opportunity to buy from other places is all going to result in lower prices for the consumers.

02:02 Here salons, pretty unaffected, pretty unaffected because these are non -tradables.

02:11 There is no way to ship a haircut across a border.

02:17 That's really not good hand -ready...

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