REGIONAL TRADE

BLOCKS
 Different regional trade blocs.
 What is NAFTA?
 The Elimination of Trade
Barriers.
 When is NAFTA Started?
 Why was NAFTA formed?
 Advantages.
 Disadvantages.
 NAFTA in US
 Exports.
 Imports.
 Trial Balance.
 Investment.
 SAARC
 NAFTA
 GCC
 EU
 EFTA
 LAIA
 CACM
 MERCOSU
R
 APEC
 ANCOM
 ENCOWAS
 ASEAN
 NAFTA is short for the North American Free
Trade Agreement. NAFTA covers Canada, the
U.S. and Mexico making it the world’s largest free
trade area (in terms of GDP). NAFTA was
launched 20 years ago to reduce trading costs,
increase business investment, and help North
America be more competitive in the global
marketplace.

 As of January 1, 2008, all tariffs between the three

countries were eliminated. Between 1993-2009,
trade tripled from $297 billion to $1.6 trillion.
 NAFTA helped to eliminate a number of non-tariff measures affecting
agricultural trade between the United States and Mexico. Prior to January 1,
1994, the single largest barrier to U.S. agricultural sales was Mexico’s
import licensing system. However, this system was largely replaced by
tariff-rate quotas or ordinary tariffs.

 All agricultural tariffs between Mexico and the United States were eliminated
as of January 1, 2008. Many were immediately eliminated and others were
phased out over transition periods of 5, 10, or 15 years. The immediate tariff
eliminations applied to a broad range of agricultural products. In fact, more
than half the value of agricultural trade became duty free when the
agreement went into effect. Tariff reductions between the United States
and Canada had already been implemented under the CFTA

 Both Mexico and the United States protected their import-sensitive sectors
with longer transition periods, tariff-rate quotas, and, for certain
products, special safeguard provisions. However, now that the 15-year
transition period has passed, free trade with Mexico prevails for all agricultural
products. NAFTA also provides for strict rules of origin to ensure that
maximum benefits accrue only to those items produced in North America.
 NAFTA was signed by President George H.W. Bush,
Mexican President Salinas, and Canadian Prime
Minister Brian Mulroney in 1992. It was ratified by the
legislatures of the three countries in 1993.
 The U.S. House of Representatives approved it by
234 to 200 on November 17, 1993. The U.S. Senate
approved it by 60 to 38 on November 20, three days
later.
 It was signed into law by President Bill Clinton on
December 8, 1993 and entered force January 1, 1994.
Although it was signed by President Bush, it was a
priority of President Clinton's, and its passage is
considered one of his first successes.
 Article 102 of the NAFTA agreement outlines its
purpose: Grant the signatories Most Favored
Nation status.
 Eliminate barriers to trade and 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.
 Create procedures for the resolution of trade
disputes.
 Establish a framework for further trilateral,
regional and multilateral cooperation to expand
NAFTA's benefits.
 NAFTA created the world’s largest free trade area.
It allows the 450 million people in the U.S.,
Canada and Mexico to export to each other at a
lower cost. As a result, it is responsible for $1.6
trillion in goods and services annually. Estimates
are that NAFTA increases the U.S. economy, as
measured by GDP, by as much as
.5% a year.
 NAFTA Increased Trade in All Goods and
Services
 Boosted U.S. Farm Exports
 Created Trade Surplus in Services
 Reduced Oil and Grocery Prices
 Stepped Up Foreign Direct Investment
 First and foremost, is that NAFTA made it possible for many
U.S. manufacturers to move jobs to lower-cost Mexico. The
manufacturers that remained lowered wages to compete in
those industries.
 The second disadvantage was that many of Mexico's farmers
were put out of business by U.S.-subsidized farm products.
NAFTA
provisions for Mexican labor and environmental protection were
not strong enough to prevent those workers from being
exploited.
 U.S. Jobs Were Lost
 U.S. Wages Were Suppressed
 Mexico's Farmers Were Put Out of Business
 Mexico's Environment Deteriorated
 NAFTA Called for Free Access for Mexican Trucks
 On January 1, 1994, the North American Free Trade
Agreement between the United States, Canada, and
Mexico (NAFTA) entered into force.
 Trade between the United States and its NAFTA
partners has soared since the agreement entered into
force.
 U.S. goods and services trade with NAFTA totaled
$1.6 trillion in 2009 (latest data available for goods
and services trade combined). Exports totaled $397
billion. Imports totaled $438 billion. The U.S. goods
and services trade deficit with NAFTA was $41 billion
in 2009.
 The United States has $918 billion in total (two
ways) goods trade with NAFTA countries
(Canada and Mexico) during 2010. Goods
exports totaled $412 billion; Goods imports
totaled $506 billion. The U.S. goods trade deficit
with NAFTA was $95 billion in 2010.

 Trade in services with NAFTA (exports and

imports) totaled $99 billion in 2009 (latest data
available for services trade). Services exports
were $63.8 billion. Services imports were $35.5
billion. The U.S. services trade surplus with
NAFTA was $28.3 billion in 2009.
 TheNAFTA countries (Canada and Mexico),
were the top two purchasers of U.S. exports
in 2010. (Canada $248.2 billion and Mexico
$163.3 billion).

 U.S. goods exports to NAFTA in 2010 were

$411.5 billion, up 23.4% ($78 billion) from
2009, and 149% from 1994 (the year prior to
Uruguay Round) and up 190% from 1993
(the year prior to NAFTA). U.S. exports to
NAFTA accounted for 32.2% of overall U.S.
exports in 2010.
 The top export categories (2-digit HS) in 2010
were: Machinery ($63.3 billion), Vehicles (parts)
($56.7 billion), Electrical Machinery ($56.2
billion), Mineral Fuel and Oil ($26.7 billion), and
Plastic ($22.6 billion).
 U.S. exports of agricultural products to
countries totaled $31.4 billion in NAFTA
2010. categories include: fresh/chilled/froze
red Leading
($2.7
meats,billion), coarse grains ($2.2
n million), fresh
fruit ($1.9 billion), snack foods (excluding nuts)
($1.8 billion), and fresh vegetables ($1.7 billion).
 The NAFTA countries were the second and third largest suppliers
of goods imports to the United States in 2010. (Canada $276.5
billon, and Mexico
$229.7 billion).

 U.S. goods imports from NAFTA totaled $506.1 billion in 2010, up

25.6% ($103 billion), from 2009, and up 184% from 1994, and up
235% from 1993. U.S. imports from NAFTA accounted for 26.5% of
overall
U.S. imports in 2010.

 The five largest categories in 2010 were Mineral Fuel and Oil
(crude oil) ($116.2 billion), Vehicles ($86.3 billion), Electrical
Machinery ($61.8 billion), Machinery ($51.2 billion), and Precious
Stones (gold) ($13.9).
U.S. imports of agricultural products from
countries totaled $29.8 billion in 2010. Leadin
NAFTA
categories include: fresh g
snack foods, (including chocolate) ($4.0 billion),
vegetables($4.6 billion)
fresh fruit (excluding bananas) ($2.4 billion),
, live
animals ($2.0 billion), and red meats,
fresh/chilled/frozen ($2.0 billion).

 U.S. imports of private commercial services*

(i.e., excluding military and government) were
$35.5 billion in 2009 (latest data available), down
11.2% ($4.5 billion) from 2008, but up 100%
since 1994.
 The U.S. goods trade deficit with NAFTA was
$94.6 billion in 2010, a 36.4% increase ($25
billion) over 2009. The U.S. goods trade deficit
with NAFTA accounted for 26.8% of the overall
U.S. goods trade deficit in 2010.

 The United States had a services trade surplus

of $28.3 billion with NAFTA countries in 2009.
 U.S. foreign direct investment (FDI) in NAFTA Countries
(stock) was $357.7 billion in 2009 , up 8.8% from 2008.
 U.S. direct investment in NAFTA Countries is in
nonbank holding companies, and in the manufacturing,
finance/insurance, and mining sectors.
 NAFTA Countries FDI in the United States (stock) was
$237.2 billion in 2009, up 16.5% from 2008.
 NAFTA countries direct investment in the U.S. is in the
manufacturing, finance/insurance, and banking sectors