NORTH AMERICAN FREE

TRADE AGGREMENT

NAFTA

AN INTRODUCTION

• Secretariats - Mexico City, Ottawa and Washington, D.C.

• Official languages - English, French and Spanish

• Membership - Canada, Mexico, United States

• Establishment - Formation1 January 1994 

• Area - Total21,783,850 km² (1st)

• Population - 2008 estimate445,335,091 (3rd) - 

• GDP 2007 estimate - Total$15,857 billion (1st) -

• The North American Free Trade Agreement (NAFTA ) is a trilateral trade bloc in North America created by the governments of the United States, Canada, and Mexico.

• The agreements were signed in December 1993 by the leaders of the three countries — Brian Mulroney of Canada, Carlos Salinas de Gortari of Mexico, and Bill Clinton of the United States but did not come into effect until January 1, 1994.

– In terms of combined purchasing power parity GDP of its members, as of 2007 the trade bloc is the largest in the world and second largest by nominal GDP comparison.

– It also is one of the most powerful, wide-reaching treaties in the world.

NAFTA SUPPLEMENTS

• The North American Free Trade Agreement (NAFTA) has two supplements:-

the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement

on Labour Cooperation (NAALC)

• (NAAEC) was a response to environmentalists' concerns that the United States would lower its standards if the three countries did not achieve consistent environmental regulation.

• (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 social organizations in order to fight for improved labor conditions.

• Trade and Investment Effects

• NAFTA is a broad agreement, but improved market access, including tariff reductions on merchandise trade, was the major U.S. goal.

• After ten years, most tariffs have gone to zero, except for some very sensitive (mostly agricultural) goods that have limited protection for up to 15 years. Clearly, U.S.-Mexico trade and investment have grown sharply over the past decade.

• From 1994 to 2003, U.S. exports to Mexico rose 91%, compared to 41% to the world. U.S. imports increased by 179%, compared to 89% from the world.

NAFTA EU(25) & Japan

300.9

411.8

226.9

412.2

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EXPORTS IMPORTS

233.5240.6265.0293.2

343.2380.6

421.2477.3

503.3561.9

657.1612.3602.1

627.0

713.0

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1990 1992 1994 1996 1998 2000 2002 2004

U.S. – NAFTA TOTAL TRADE1990-2004

EFFECTS OF NAFTA

BENEFITS

• Benefit’s the importers by reduced or duty free goods.

• No MPF from Canada for NAFTA goods

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

• 200% increase in trade among the 3 countries.

• Increase market access within each country.

LIMITATIONS

• It has negative impacts on farmers in Mexico who saw food prices fall based on cheap imports from U.S. agribusiness

• It has negative impacts on U.S. workers in manufacturing and assembly industries who lost jobs.

• Critics also argue that NAFTA has contributed to the rising levels of inequality in both the U.S. and Mexico.

• Some economists believe that NAFTA has not been enough (or worked fast enough) to produce an economic convergence, nor to substantially reduce poverty rates

• NAFTA slightly increased growth in output and productivity –

The CBO study, which had a limited model for estimating the trade effects on GDP, found that NAFTA increased annual GDP growth in the United States by no more than .04%, and for Mexico, no more than 0.8%.

• NAFTA had little or no impact on aggregate employment –

None of the reports attributed changes in aggregate U.S. or Mexican employment levels to NAFTA

• Impact on Jobs

• The study's indicates that the reduction in net exports to Mexico has eliminated 227,663 U.S. job opportunities since 1993, and the reduction in net exports to Canada has eliminated 167,172 job opportunities in the same period. In total, NAFTA resulted in a net loss of 394,835 jobs in its first three years.

• The analysis finds that NAFTA has eliminated significant numbers of jobs for women and members of minority groups, as well as white males. Between 1993 and 1996, women lost 141,454 jobs to NAFTA, blacks lost 36,890 jobs, and Hispanics lost 22,520 jobs, numbers closely reflecting these groups' shares in manufacturing industries

MOBILITY OF PERSONS

According to the Department of Homeland Security Yearbook of Immigration Statistics, during fiscal year 2006 (i.e., October 2005 through September 2006 74,098 foreign professionals (64,633 Canadians and 9,247 Mexicans) were admitted into the United States for temporary employment under NAFTA (i.e., in the TN status).

Additionally, 17,321 of their family members (13,136 Canadians, 2,904 Mexicans, as well as a number of third-country nationals married to Canadians and Mexicans) entered the U.S. in the treaty national's dependent (TD) status

PUBLIC OPINION

• Public opinion toward NAFTA in the United States, Canada, and Mexico is mixed. A survey conducted by CIDE and COMEXI in Mexico showed that 64 percent of the Mexican public favored NAFTA.

• The Program on International Policy Attitudes reported in a poll that 47 percent of Americans thought that NAFTA has been good for the United States, while 39 percent thought it had been bad for the country

RECENT NAFTA NEWS

NAFTA Toll-Highway Destroying Prime Agricultural Land

• The Trans-Texas Corridor (TTC) is no ordinary highway. The toll road would be four football fields wide. It includes separate lanes (up to six for automobiles, four for large trucks), plus tracks for freight trains, separate tracks for high-speed and commuter rail, also space for oil and gas pipelines, electricity wires, and broadband transmission cables.

The implications of this scheme are staggering. Some experts say that up to a million people in Texas stand to lose their homes and 584,000 acres of rich farm and ranchland are to be destroyed, all for a privately funded highway.

CONCLUSION

NAFTA is one of the most successful treaties of the times in terms of growth in trade i.e. imports & exports , G.D.P e.t.c but on the other hand it is also responsible for causalities like loss of jobs, migration, rising level of inequality and many others.

Thus it is important that the treaty should be carried forward concerning about taking steps for the problems originated due to NAFTA ,otherwise it will create inequality in many terms which can lead to bad conditions in future for all the three countries.

PRESENTED BY -

ANANT SAXENA

POONAM JAMWAL

HEENA DUA

POOJA VERMA

M.B.A 3rd Sem