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    Nafta North American Free Trade Agreement

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    Aeimun
    The North American Free Trade Agreement (NAFTA) established a free trade zone between the United States, Canada, and Mexico in 1994. It eliminated tariffs on goods traded between the three countries and promoted cross-border investment. NAFTA increased trade volumes and foreign direct investment, but also faced criticism for costing some U.S. and Mexican jobs and being unfair to certain industries in both countries. Overall, proponents argue it strengthened economic ties and competitiveness in North America, while critics say it had negative social impacts.

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    Nafta North American Free Trade Agreement

    Uploaded by

    Aeimun
    945 views42 pages
    The North American Free Trade Agreement (NAFTA) established a free trade zone between the United States, Canada, and Mexico in 1994. It eliminated tariffs on goods traded between the three countries and promoted cross-border investment. NAFTA increased trade volumes and foreign direct investment, but also faced criticism for costing some U.S. and Mexican jobs and being unfair to certain industries in both countries. Overall, proponents argue it strengthened economic ties and competitiveness in North America, while critics say it had negative social impacts.

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    The North American Free Trade Agreement (NAFTA) established a free trade zone between the United States, Canada, and Mexico in 1994. It eliminated tariffs on goods traded between the three countries and promoted cross-border investment. NAFTA increased trade volumes and foreign direct investment, but also faced criticism for costing some U.S. and Mexican jobs and being unfair to certain industries in both countries. Overall, proponents argue it strengthened economic ties and competitiveness in North America, while critics say it had negative social impacts.

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    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    945 views42 pages

    Nafta North American Free Trade Agreement

    Uploaded by

    Aeimun
    The North American Free Trade Agreement (NAFTA) established a free trade zone between the United States, Canada, and Mexico in 1994. It eliminated tariffs on goods traded between the three countries and promoted cross-border investment. NAFTA increased trade volumes and foreign direct investment, but also faced criticism for costing some U.S. and Mexican jobs and being unfair to certain industries in both countries. Overall, proponents argue it strengthened economic ties and competitiveness in North America, while critics say it had negative social impacts.

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    of 42

    NAFTA

    North American Free Trade Agreement


    References
     http://useconomy.about.com/od/tradepolicy/p/NAFTA_History.htm
     http://useconomy.about.com/od/tradepolicy/p/NAFTA_Advantage.htm
     http://webcas.cas.suffolk.edu/royo/mexico/sld009.htm
     http://investincanada.gc.ca/eng/advantage-canada/nafta-advantage.aspx
     http://findarticles.com/p/articles/mi_m1052/is_n1_v115/ai_15149318/pg_3/?
    tag=content;col1
     http://www.ibtimes.com/contents/20090707/unveiling-latin-americaeconomic-
    success.htm
     http://www.naftaworks.org/benefits-of-nafta.php
     http://www.kwintessential.co.uk/articles/article/Canada/Canadian-Benefits-of-
    NAFTA/2775
     http://www.ncpa.org/pub/ba619
     http://www.canada.com/vancouversun/news/editorial/story.html?id=03a50730-
    0fa5-4062-8b25-66e3a32f0115
     North American Free Trade Agreement (NAFTA) - duties, benefits
    http://www.referenceforbusiness.com/encyclopedia/Mor-Off/North-American-
    Free-Trade-Agreement-NAFTA.html#ixzz16yqjZvli
     http://www.referenceforbusiness.com/encyclopedia/Mor-Off/North-American-
    Free-Trade-Agreement-NAFTA.html
    • January 1994 – United States, Canada &
    Mexico

    • World’s largest free trade area – links 444


    million people

    • Trade liberalization

    • Elimination of tariffs

    • Economic Growth
    Need for NAFTA
    • Grant the signatories ‘Most Favored
    Nation’ status

    • Eliminate barriers to trade

    • Facilitate the cross-border movement of


    goods and services

    • Promote conditions of fair competition


    • Increase investment opportunities

    • Provide protection and enforcement of


    intellectual property rights

    • Procedures for the resolution of trade disputes

    • Framework for further trilateral, regional and


    multilateral cooperation to expand NAFTA's
    benefits
    NAFTA

    Contributions & Benefits


    Increased Trade

    • Trade between the NAFTA signatories tripled,


    from $297 billion in 1993 to $1 trillion in
    2007
    • Canada also has benefited from an increase of
    trade in services.
    Boosted US Farm Exports

    • NAFTA increased farm exports because it eliminated


    high Mexican tariffs

    • Mexico is the top export destination for beef, rice,


    soybean meal, corn sweeteners, apples and beans

    • As a result of NAFTA, the percent of U.S. agricultural


    exports to Canada and Mexico has grown from 22%
    in 1993 to 30% in 2007
    Trade Surplus in
    Services

    • Export of services – financial & healthcare - to


    nearby countries

    • NAFTA requires governments to publish all


    regulations, lowering hidden costs of doing business
    Reduced Oil and Grocery
    Prices

    • The U.S. imported $157.8 billion in oil from Mexico


    and Canada

    • Reduced U.S. reliance on oil imports from the Middle


    East and Venezuela
    Elimination of tariffs
    • Tariffs on all farm products phased out

    • Producers of certain "sensitive" products allotted extra


    time to adjust gradually to competition from products of
    other NAFTA countries

    • U.S. automobile manufacturers have gained greater access


    to Mexican market

    • Mexico’s telecommunication system


    Stepped Up Foreign Direct Investment

    • U.S. foreign direct investment (FDI) in Canada and Mexico


    more than tripled to $348.7 billion

    • Reduced investors' risk by guaranteeing they will have the


    same legal rights as local investors

    • Investors can make legal claims against the government if


    it nationalizes their industry or takes their property by
    eminent domain
    Environment

    • NAFTA is more protective of the environment than any


    other international agreement or treaty ever before
    entered into by the United States

    • Promoted communication about environmental problems


    among governments, citizens, and environmental groups
    from the three NAFTA countries

    • Failure to enforce environmental laws and regulations


    results in sanctions suspension of trade benefits
    Dispute resolution

    • Administration of NAFTA is handled by a commission


    composed of ministers designated by each NAFTA
    country

    • A secretariat serves the commission and assists with


    the administration of dispute resolution panels
    Closer to the US than . . . the US

    • Many Canadian production


    hubs are actually closer to
    target U.S. markets than
    American production sites

    • Of Canada's 20 largest cities,


    17 are within an hour and a
    half drive of the United States
    and many are much closer
    Smart Borders

    • To accommodate the growth in trade and commerce,


    Canada and the United States have signed a pact to work
    together to create a Smart Border

    • Collaboration in identifying and addressing security


    risks

    • Expediting the legitimate flow of people and goods


    across the Canada-US border.
    Access to Latin America
    The North American Free Trade Agreement
    (NAFTA) gives you access to the entire
    continent and entrée to Latin America
    Generating Jobs

    • Standards of living have steadily been rising

    • The improvements in living conditions are in part due to the


    generation of jobs

    • Under NAFTA businesses have become more profitable and


    competitive leading to job creation in Canada and the other
    partnered countries

    • The increased economic activity helps generate jobs

    • One in five Canadian jobs is at least in part related to trade


    Protection of intellectual
    property rights

    • NAFTA builds on the work of the General Agreement on


    Tariffs and Trade (GATT), providing substantial
    protection for intellectual property

    • NAFTA includes details regarding procedures for

    • Enforcement of intellectual property rights


    • Damages in the event of violations of such rights
    Agreement on labor

    • "Labor Side Agreement," was negotiated in response to


    concerns that NAFTA itself did little or nothing to
    protect workers

    • To create new employment opportunities


    • To protect, enhance, and enforce basic workers' rights
    • Affirming respect for each party's constitution and laws

    • Transparency among the three countries regarding


    their respective labor laws and their enforcement of
    those laws
    Criticism
    U.S Employment rates

    • Net manufacturing employment declined by 3,654,000


    (1994-2007)

    • U.S exports vs. imports to Mexico ($107 bn vs $136 bn)

    • Trade deficit ($29 billion)

    • Gap between rich and poor

    • Increase in Mexican migrants


    Mexico Agriculture

    • Opening competition to heavily subsidized U.S farm


    industry

    • Crippled Mexican farming industry

    • Increase in the number of Mexican migrants


    Mexican Energy Industry

    • World’s sixth largest producer of crude oil

    • Second largest oil supplier to U.S

    • Insignificant domestic investments

    • Declining production – PEMEX

    • Mexico becoming a net oil importer


    Trucking Industry not liberalized

    • U.S federal policy to unload cargo in commercial


    zones

    • Lack of liberalization of transportation

    • Delay in opening U.S markets to Mexican truckers

    • Costs U.S $200-400 million/ year


    Canadian Companies

    • Mel Hurtig – more than 10,000 Canadian companies


    taken over by foreigners.

    • 98% of FDI in Canada for foreign takeovers


    NAFTA – Chapter 11 & 19

    • Chapter 11 allows corporations to sue Mexico, U.S


    and Canada in case of failed investment

    • Chapter 19 allows Antidumping and countervailing


    duty determinations with binational panel review

    • Applies a panel of individuals instead of international


    law!!
    Defense
    U.S. Employment

    • Misconception – foreign competition hurts U.S


    employment

    • Greater benefits of free trade dispersed

    • Losses concentrated in a few sectors only

    • Job losses balanced by job creation in other sectors


    U.S. Employment

    • U.S employment 110 million – 137.6 million (1993-


    2007), 24% increase

    • U.S unemployment rate averaged 5.1 % after NAFTA


    vs. 7.1 % before NAFTA
    Increased Trade U.S- Mexico
    Increased Trade U.S - Canada

    • The volume of trade has tripled since


    1994

    • Economic growth has soared

    • Businesses have become more


    competitive

    • Millions of jobs created


    Total trilateral trade
    – In billions of U.S dollars -

    • U.S - Canada Trade grown


    by 156%
    ($199 bn – 509 bn)

    • Canada- Mexico Trade


    increased by 339% ($4.1
    bn-18 bn)

    • U.S – Mexico increase by


    302.6% ($85.2bn – 343 bn)
    Trucking and PEMEX

    • Provides a net benefit to both the countries

    • Needs a policy revision nevertheless

    • Withdrawing from the international trading system would be


    unwise

    • Allowing the EU and Asian countries to take the lead

    • Economic liberalization is a challenge but….

    • Mexico will become a large and growing domestic market with


    the help of NAFTA
    CONCLUSIONS
    • Strengthened trade and economic relations
    between the three countries

    • More competitive North American platform

    • Opportunities in the global marketplace

    • Sustaining growth against Asia and South


    America
    Questions

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