CASE RoO: NAFTA and The Trade

Automotive Goods
• The North American Free Trade Agreement
(NAFTA) is a free trade agreement between
the Canada, Mexico and the United States
that was completed in 1994, but had its roots
in the 1965 US-Canada Auto Pact, and the
1988 US-Canada FTA
• Japanese competition has driven U.S. policy
with respect to its automotive sector with
collateral effects on both Canada and Mexico
 CASE: NAFTA and The Trade
Automotive Goods
Involving:
• Canada-U.S. Free Trade Agreement

• Canadian and Mexican Automotive Industries

 CASE: NAFTA and The Trade
Automotive Goods
• NAFTA is a huge success for the U.S., Canadian and Mexican
automotive industries:
– Increased auto sales, production and employment
– trade between the U.S. and Mexico increased
dramatically, with U.S. automotive exports doubling since
1993, up to $13.3 billion in 2003, and Mexico’s auto
exports to the U.S. rose 495 % during the same period
from $11 billion to $54.5 billion.
– exceed expectations
 CASE: Malaysian Proton and AFTA: threat
or advantage?

• History of Malaysian automotive industry-

back to 1960’s
• Trade conflicts started between Thailand and
Malaysia- autoparts
- High tariffs on automobiles and auto parts
from Thailand
- Thailand imposed high tariffs on palm oil
imports from Malaysia
CASE: Malaysian Proton and AFTA:
threat or advantage?
• Positive side of tariff
- Protection of the domestic automotive industry
- Reduced foreign exchange outlays
- Higher government revenue

• Negative side of tariff

- obstacles to international trade
- inefficiencies among local producers
- high production costs
 CASE: Malaysian Proton and AFTA:
threat or advantage?
• Removal trade barriers
- threat future development
- outside pressure
- collapse of automotive firms
 CASE: Malaysian Proton and AFTA:
threat or advantage?
• Measures to be taken
- Cost competitiveness and quality
- Local component parts vendors
- Strengthening export markets
 DISCUSSION
• 3RD KUALA LUMPUR INTERNATIONAL
AUTOMOTIVE CONFERENCE 2010
– Under performing of ASEAN Automotive Industry
– Passive Competition among ASEAN Countries
• Eyeing to Thailand Liberalization Approach
• Status Quo