Many U.S. and Canadian firms have located manufacturing plants in Mexico to take advantage of lower labor costs. Additionally, many tariffs on U.S. exports have been eliminated. These global changes occurred because of:

Question

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NAFTA (North American Free Trade Agreement) is a treaty between Canada, the United States, and Mexico that eliminated tariffs and other trade barriers between the three countries. This facilitated the relocation of manufacturing plants to Mexico, where labor costs were lower, and opened new export opportunities for U.S. and Canadian firms. GATT (General Agreement on Tariffs and Trade) was a precursor to NAFTA that aimed to reduce trade barriers worldwide, but it did not specifically address North America. The European Union and perestroika (a series of economic and political reforms in the Soviet Union in the 1980s) are not directly related to the changes in trade patterns described in the question.

Many US and Canadian Firms Have Located Manufacturing Plants in Mexico