NAFTA question!!!

美自由貿易協議（英語：North American Free Trade Agreement，NAFTA) 是美國、加拿大及墨西哥在1992年8月12日簽署了關於三國間全面貿易的協議。
Ans:
1. As Mexico has an abundant pool of low cost labour, the labour intensive work in USA & Canada will be shifted to Mexico. For example, the hourly wage in Mexico is US$1, while in the others countries are US$15. Therefore, manay people in USA & Canada will lose their job, so the unemployment will increase. But this is only in short term.
2. The cost of labour is lower in Mexico than Canada, therefore, the Auto Plant will be relocated to Mexico, so that the total cost will be decreased. The original workers in Canada either unemployed or suffered a wage decrease.
3. In the short term, the unemployment in Canada will increase, as the labour intensive work will be replaced by the workers in Mexico. However, in the long run, since the import from Mexico is cheaper Canadian will buy more from them. It is increase the demand for the labour in Shipping, Transporting, Trading, Wholesales, Retails & Aftersales services. Moreover, generally speaking, the education level in Canada is higher, with more transaction and more wealth in Mexican, the Canadian can provide them with more high tech products and more financial services. Therefore, the Canadian will be also benefit. With increase in wealth, they will spend & consume more & demands for retails services, which the unemployed could change their job to retails services. Therefore in a Long run, the unemployment rate will be decreased.