Competition increases managerial efficiency, worker productivity, and higher rate of investment by low-cost firms. The development of more efficient economies, in turn, creates more jobs and increases standards of living in the member countries. In addition, reduced tensions and an increased likelihood of peace may be another benefit from a trade agreement. There are several components in the agreement. One component deals with market access. Issues such as tariffs, non-tariffs barriers, rules of origin and governemnt procurement are addressed under this category. Trade rule components deal with issues such as subsidies and health and safety standards. The agreement also deals with issues facing specific industries such as the automobile, textile, energy and agriculture. The financial and telecommunications industries are the two areas of conflict. The other components include investment, intellectual property, and dispute settlement. There are four major issues in NAFTA: rules of origin, labor, agriculture and environment. Rules of Origin. Any regional free trade agreement is subject to a "transshipment problem." Without a Rules of Origin clause, a business from a non-member country could import unfinished products into the member country with the lowest tariff rates. The foreign company could then assemble its products in the member country and ship them to the remaining member countries, avoiding their higher tariffs. The Rules of Origin, also known as local content requirement, can be defined as "the minimum percentage of a country's exported product the must be produced or substantially transformed within the border of the exporting country" (Aguilar 1993). Labor. Among those who are strongly against NAFTA are labor unions who fear that American workers will suffer as U.S. businesses move their business to Mexico in search of lower labor cost. In 1991, the average manufacturing wage rate in the U.
