Nafta Project by- WASIF

8/8/2019 Nafta Project by- WASIF

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WASIF RAZA PH 1046

YOGENDRA PATEL PH 1047


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United States

Canada

Mexico

MEMBERS OF NAFTA


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Th e North American Free Trade Agreement (NAFTA ) is atrilateral trade bloc in Nort h America created by t h e governments of th e United States, Canada, and Mexico.

Th e agreements were signed in December 1993 by t h e leaders of th e t h ree countries Brian Mulroney of Canada, Carlos Salinasde Gortari of Mexico , and Bill Clinton of the United States butdid not come into effect until January 1, 1994.

In terms of combined purc h asing power parity GDP of its members,as of 2007 t h e trade bloc is t h e largest in t h e world and secondlargest by nominal GDP comparison.

It also is one of t h e most powerful, wide-reac h ing treaties in t h eworld.


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y Secretariats- Mexico City, Ottawa , Washington D.C.y L anguages- Fr ench, English, Spanishy M embership- Canada, United States and Mexicoy E stablishment - Form ation Janua r y 1, 1994y A rea - T otal 21,783,850 k m 2y Po

pulatio

n-

2010 estim

ate 456,416,628y GD P (PPP) - 2008 (IMF ) esti m ate - T otal$17,153,462

tr illiony GD P (no m inal )2008 (IMF ) esti m ate - T otal$16,792

trillion


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Im pr ove political r elationships a m ongst the m emb er count r ies.

Help Mexico to ea

rn additional fo

rex to

meet its fo

reign de

btb u r den.

Dec r ease the flow of e m igr ation f r om Mexico to the US b y pr oviding the m job oppo r tunities.

Cr eate a sta b le and p r edicta b le envi r on m ent fo r investo r s .


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y T he goal of NA F T A was to eli m inate b arr ier s of t r ade andinvest m ent b etween the USA, Canada and Mexico. T heim ple m entation of NA F T A on Janua r y 1, 1994, br ought theimm ediate eli m ination of ta r iffs on more than one half of US imports from Mexico and more than one third of US exports to Mexico.

y Within 10 yea r s of the i m ple m entation of the ag r eem ent

all US-Mexico ta

riffs would

be eli

minated except fo

rso

meUS agr icultu r al expo r ts to Mexico that we r e to b e phased

out in 15 yea r s. Most US - Canada t r ade was al r eady duty f r ee. NA F T A also seeks to eli m inate non - ta r iff tr adeb arr ier s and pu b lishe r.


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y The North American Free Trade Agreement (NAFTA) has twosupplements:- North American Agreement on Environmental Cooperation (NAAEC) and North American Agreement on Labour Cooperation (NAALC).

y (NAAEC) was a response to environmentalists' concerns that the UnitedStates would lower its standards if the three countries did not achieveconsistent environmental regulation.

y (NAALC) supplements NAFTA and endeavors to create a foundation for cooperation among the three countries for the resolution of labour problems,as well as to promote greater cooperation among trade unions and socialorganizations in order to fight for improved labor conditions.


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Clearly not about cheap labor It is about integration of the North American marketplace

It is about moving up the value-added chainIt is about maintaining and increasing competitiveness and productivity Mexico, like the U.S., fears losing its manufacturing sector to

other countries why? Over the last 5 years:

y Chinas exports to the U.S. grew 300%y Mexicos exports to the U.S. grew 30%


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NAFTA slightly increased growth in output and

productivity Th e CBO study, w h ich h ad a limited model for estimating

th e trade effects on GDP, found t h at NAF T A increased annualGDP growt h in t h e United States by no more t h an .04%, and for

Mexico, no more t h an 0.8%.

NAFTA had little or no impact on aggregateemployment

None of t h e reports attributed c h anges in aggregate U.S.or Mexican employment levels to NAF T A


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W orlds largest free trade area: 442.4 million people; $15.4 trillion GDP

No tariffs on U.S. exports to Mexico; final tariffseliminated in 2008

E limination of Barriers

Institution of Dispute Resolution Process

U.S-Mexico trade increased 377%: from $88 billion

in 1993 to $347 billion in 2007


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y Maquilado r as (Mexican facto r ies which take in i m po r ted r awm ate r ials and p r oduce goods fo r expo r t) have b ecom e theland m ar k of t r ade in Mexico.

T hese a r e plants that m oved to this r egion f r om theUnited States, hence the de b ate ove r the loss of A m er ican jo b s.H uf b aue r' s (2005) b ook shows that inco m e in the m aquilado r asecto r has inc r eased 15.5% since the i m ple m entation of NA F T A in 1994.

y Othe r secto r s now b enefit f r om the f r ee t r ade ag r eem ent, andthe sha r e of expo r ts f r om non - b or de r states has inc r eased in thelast five yea r s while the sha r e of expo r ts f r om m aquilado ra-b or de r states has dec r eased.


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Trade and Investment Effects

NAF T A is a broad agreement, but improved market access,including tariff reductions on merc h andise trade, was t h emajor U.S. goal.

After ten years, most tariffsh

ave gone to zero, except for some very sensitive (mostly agricultural) goods t h at h avelimited protection for up to 15 years. Clearly, U.S.-Mexicotrade and investment h ave grown s h arply over t h e pastdecade.

From 1994 to 2003, U.S. exports to Mexico rose 91%,compared to 41% to t h e world. U.S. imports increased by179%, compared to 89% from t h e world.


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NAFTA EU(25) & Japan

300.9

411.8

226.9

412.2

$0

$100

$200

$300

$400

$500

$600

$700

$800

B I L L I O N

D O L L A R S

EXPORTS IMPORTS


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Impact on JobsTh e study's indicates t h at t h e reduction in net exports toMexico h as eliminated 227,663 U.S. job opportunitiessince 1993, and t h e reduction in net exports to Canadah as eliminated 167,172 job opportunities in t h e sameperiod. In total, NAF T A resulted in a net loss of 394,835

jobs in its first t h ree years.

Th e analysis finds t h at NAF T A h as eliminated significantnumbers of jobs for women and members of minority

groups, as well as w h ite males. Between 1993 and 1996,women lost 141,454 jobs to NAF T A, blacks lost 36,890 jobs, and Hispanics lost 22,520 jobs, numbers closelyreflecting t h ese groups' s h ares in manufacturing industries


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y NA F T A eli m inates t r ade b arr ier s.

y Benefits the i m po r te r s b y r educed o r duty f r ee goods.

y No MPF f r om Canada fo r NA F T A goods.

y Can make the exporter more competitive then other non- participating countries.

y 200% increase in trade among the 3 countries.

y Increase market access within each country.


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y It has negative impacts on farmers in Mexico who sawfood prices fall based on cheap imports from U.S.agribusiness.

y It has negative impacts on U.S. workers in manufacturingand assembly industries who lost jobs.

y Critics also argue that NAFTA has contributed to the

rising levels of inequality in both the U.S. and Mexico.y Some economists believe that NAFTA has not been

enough (or worked fast enough) to produce an economicconvergence, nor to substantially reduce poverty rates


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NAFTA is one of the most successful treaties of the times interms of growth in trade i.e. imports & exports , G.D.P etc. buton the other hand it is also responsible for causalities like lossof jobs, migration, rising level of inequality and many others.

Thus, it is important that the treaty should be carriedforward concerning about taking steps for the problemsoriginated due to NAFTA ,otherwise it will create inequality inmany terms which can lead to bad conditions in future for allthe three countries.

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Nafta Project by- WASIF