Transcript north american free trade agreement

PROJECT BY:
- Bhavik Shah
- Neel Merchant
- Pooja Gala
- Ruchika Gupta
- Sunny Shah
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NORTH AMERICAN FREE TRADE AGREEMENT
1992
Signed by the three countries
1993
Ratification by the three countries legislatures
Signed into law
1994
Came into Effect
• It superseded the Canada- United States Free
Trade Agreement between the U.S. and Canada
• World’s largest free trade area in terms of GDP
• In terms of combined purchasing power parity
(GDP)
• The trade block is the largest in the world
• Second largest by nominal GDP comparison
Why Was NAFTA Formed ?
Article 102 of the NAFTA agreement outlines its
purpose:
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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
Contd…..
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Increase investment opportunities
Provide protection and enforcement of
intellectual property rights
Create procedures for the resolution of
trade disputes
Establish a framework for further trilateral,
regional and multilateral cooperation to
expand NAFTA's benefits
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North American Agreement on Environmental
Cooperation (NAAEC)
North American Agreement on Labor
Cooperation (NAALC)
Creates a framework to :
- Better conserve
- Protect
- Enhance
…..the North American environment
Concrete measures to further cooperation
on these matters between the three
countries
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The first international agreement on labor
to be linked to an international trade
agreement
Provides a mechanism for member
countries to ensure the effective
enforcement of existing and future
domestic labor standards and laws without
interfering in the sovereign functioning of
the different national labor systems
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To improve working conditions and living standards in each
Party's territory
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To promote, to the maximum extent possible
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To encourage cooperation to promote innovation and rising
levels of productivity and quality
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To encourage publication and exchange of information, data
development and coordination, and joint studies
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To pursue cooperative labor-related activities on the basis of
mutual benefit
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To promote compliance with, and effective enforcement by
each Party of, its labor law
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To
foster transparency in the administration of labor law
 Exports totaled $452 billion; Imports totaled $568 billion. The U.S.
goods and services Trade Deficit with NAFTA was $116 billion 2007
 The NAFTA countries (Canada and Mexico) were the top two
purchasers of U.S. exports in 2008. (Canada $261.2 billion and
Mexico $151.2 billion)
 NAFTA created the world's largest free trade area, which now links
444 million people producing $17 trillion worth of goods and
services
 Agricultural trade has increased in both directions under NAFTA
from $7.3 billion in 1994 to $32.3 billion in 2008
 NAFTA Countries FDI in the United States was $219.2 billion in
2007. U.S. direct investment in NAFTA Countries is in the
manufacturing, finance, nonbank holding companies and mining
sectors
SOURCE: U.S. Department of Transportation, Research and Innovative Technology Administration, Bureau of
Transportation Statistics, Transborder Freight Data as of October 2008.
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Private Commercial Services exports to Canada & Mexico
were $66.6 billion in 2007
U.S. goods exports to Canada and Mexico grew from $142
billion in 1993 to $364.6 billion in 2006, an increase of
157%. NAFTA countries Top 2 Importers
U.S. exports of agricultural products to NAFTA
countries totaled $32.3 billion in 2008.
U.S. supplies more than 75% of Mexican agricultural
products
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NAFTA countries were the largest and third largest
suppliers of goods imports to the United States in
2008. (Canada $339.5 billon, and Mexico $215.9
billion)
Private Commercial Services imports were $40.2
billion in 2008
The five largest categories in 2008 were Mineral
Fuel and Oil (crude oil) ($157.8 billion), Vehicles
($79.7 billion), Electrical Machinery ($63.5 billion),
Machinery ($46.5 billion), and Special Other
(returns) ($14.3 billion).
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One of NAFTA's biggest economic affects on
U.S.-Canada trade has been to boost bilateral
agricultural flows Canada is the leading importer
of U.S. agricultural products
Trade in services with the United States reached
$91.3 billion in 2008, up from $42.3 billion in
1993
Canada ships 87 % of its merchandise trade
exports to the United States, and receives 63% of
the goods it imports from the United States.
United States
Mexico
$ 602.5 billion (2008)
$ 23.8 billion (2008)
Canadian merchandise exports $ 375.5 billion (2008)
$ 5.8 billion (2008)
Canadian merchandise imports $ 227.0 billion (2008)
$ 17.9 billion (2008)
Two-way merchandise trade
with Canada
Canadian direct investment,
stock
$ 230.6 billion (2008)
$ 4.5 billion (2008)
Canadian commercial services
exports
$ 24.1 billion (2008)
$ 222 million (2006*)
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new market opportunities
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new customers
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new links in supply and production chains
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new partnerships
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new investors
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new choices for consumers
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Canadian employment levels have also shown
steady gains in recent years, with overall
employment rising from 14.9 million to 15.7
million in the early 2000s.
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Canada's GDP has grown at a faster rate than
either Mexico's or the United States' since
1994
Between 1994 and 2003, Canada's economy
showed average annual growth rates of 3.6
percent, compared to 3.3 percent in the
United States and 2.7 percent in Mexico
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Under NAFTA Canada lost control over its energy
resources
With “NAFTA-plus”, it could also lose control over
its freshwater resources
Water transfers from Canada to the United States
are emerging as an issue under the auspices of
the Security and Prosperity Partnership (SPP).
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1930s – 1980s: Strong protectionist trade
policy
1980s: Inflation and declining standard of
living
1982: Debt crisis
1980s – 1990s: Series of measures to
restructure the economy that included steps
toward unilateral trade liberalization
Mid 1990s: Financial crisis
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To increase export diversification by
attracting FDI
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Create jobs
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Increase wage rates
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Reduce poverty.
IMPACT ON INDIA
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Setback for textile industry
The formation of NAFTA led to displacement of
non-members by members
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Trade barriers for third countries
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Export of Primary goods
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India’s position declined as agriculture producers
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Commodities also declined
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India’s exports have increased since jan2003 to oct-2003 by 11.5%
Imports to Canada declined by 3.28% and
exports increased by 9.10%
India's exports also marked a healthy trend of
22 per cent to Mexico
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USA
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Canada
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Mexico
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Largest trading partner
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Accounting 22% of India's global exports
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Exports have grown by 11.55% and global
imports increased by 8.8%
Among its 25 large export destinations, the
growth rate in exports to India continues to
be the highest, more than even China
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Fertilizers exports of USA have also grown
significantly to US $ 87.9 million during
January – October 2003, as against only US $
34.2 million for the same period in 2002.
Growth in other sectors as well.
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Indian exports to Canada have increased by
9.1% in 2003
Exports products of India have shown a positive
growth except cotton yarn and fabric.
India is the 18th largest exporter of goods to
Canada.
Exports had been gradually declined in earlier
period..
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Organic chemicals have shown a growth of
35.67% closely followed by iron & steel
products.
Paper and paperboard have shown massive
growth of 136%, followed by aircraft and
inorganic chemicals.
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India’s export to Mexico showed a positive
growth of 22%
India’s market share has risen to 0.32% up
from 0.26% in 2002
Amongst the top 30 exporting countries to
Mexico, only 8 have registered a growth of
over 20% in their exports and India is one of
them.
India’s share in total Mexican exports is
0.26%
OVERALL IMPACT
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Between 1993 and 2006, trade among NAFTA partners
climbed 197%, from $297 billion to $883 billion
U.S. exports to NAFTA partners grew 157%, versus 108%
to the rest of the world in the same period
Daily NAFTA trade in 2006 reached $2.4 billion
U.S. manufacturing output rose 63% from 1993-2006,
compared to an increase of 37% from 1980-1993
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Trade between the three countries has
tripled, reaching 894.3 billion dollars in 2007
China to be the fourth partner
The economic difficulties in the US now augur
for Mexico a significant reduction in exports,
a shrinking growth rate projected at less than
0.5 per cent in 2009
CONCLUSION
 NAFTA is a classic example of the benefits countries can
derive by moving towards multilateral trade agreements
 Further trade liberalization between neighboring countries FTAs
 Protecting environment and labour
 Free Trade Area of the Americans FTAA
 Future for India