Presentation Prepared By:

1. Quazi Lamia Hashmi (3-19-43-013)

2. Aditi Dey (3-19-43-018)

3. Pranti Tawheed (3-20-44-017)

 NAFTA
The North American Free Trade Agreement (NAFTA) was implemented to
promote trade between three superpowers U.S., Canada, and Mexico in
(1994).
 Background & History

• NAFTA was inspired by the success of the European Economic

Community (1957–93)
• Approx. one-third of U.S exports to Canada and Mexico-machinery,
vehicle parts, mineral fuel/oil, plastics etc.
• Canada & Mexico, second and third-largest suppliers of imported
goods (as of 2019) for US.
• Establishing a free-trade area would increase trade and production
resulting millions of well-paying jobs in all participating countries.
Objectives
(NAFTA)
 Reduce tariffs
 Reduce/Eliminate NTB
 reducing the red tape
 Nondiscrimination
 National treatment
 Reciprocity
 Exemptions
Before After
Before After
NAFTA USMCA
The new NAFTA is USMCA (U.S.-
Mexico-Canada Agreement)
entered into force on July 1, 2020.
NAFTA Major Events
Bilateral free trade deal 
June
10,1990 Comprehensive free trade pact
between the two neighbors and
Canada also join the talks in
1991, paving the way for three-
way negotiations
Giant sucking sound
Nov
3,1992
Bill Clinton wins the election,
defeating incumbent Bush
Creating the world’s largest
Dec free trade area
17,1992 NAFTA is signed by outgoing
Bush
Neo-liberalism and explicitly
against the free trade deal Jan
1,1994
 Declaration of war against the
Mexican government leads to
days of fighting and dozens of
deaths
Anti-globalization protesters
Nov
converge on the U.S. 30,1999
Launch new International trade
talks
Easing trade with China
Dec
Integrating the Asian giant more 11,2001
deeply into the global economy
 NAFTA Major Events…

Winning the traditionally

pro-free-trade party’s nod Iron out bilateral
differences
Denouncing NAFTA, calling Reach a deal to overhaul the
it “the worst trade deal ever trade pact

Aug Aug
Jan July 27,201
16,201
1,2008 19,2016 8
7

Stipulates that trade

Derail negotiations
barriers
Modernizing NAFTA
Designed to smooth
economic shocks in
vulnerable industries
 NAFTA Major Events…

U.S.-Mexico-
Canada
Revised Ratification of Agreement
USMCA USMCA
Affects other
To satisfy labor Last three
countries
and signators
environmental
Sep 30,2018 standards Jan 29,2020 Apr 10,2020

Salvage a Dec 10,2019 Trump Mar 13,2020 Ravages the Jul 1,2020
trilateral pact signs new trade global economy
Forge a last-gasp
deal Abusing power Monthly trade
and obstructing flows among the
Congress three USMCA
members
 Quadrupled Trade
Lowered Prices
Increased Economic Growth
Achievements
Created Jobs
Increased Foreign Direct
Investment
 Achievements (Cont.)

Quadrupled Between 1993 and 2019, trade (In Billions of Mexico Canada NAFTA
Trade: between the three members US$) Partners
quadrupled from $290 billion to $1.23
trillion
U.S. Exports to: $256.6 $292.6 $549.2

During that time, the United States

increased its exports of goods to the
other two from $142 billion to $549 U.S. Imports $358.0 $319.4 $677.4
billion from:

Total U.S. Trade: $614.6 $612.0 $1,226.6

NAFTA boosted trade by eliminating all

tariffs between the three countries. It
also created agreements on
international rights for business
Figure: 2019 NAFTA Trade in Goods
investors. That reduced the cost of
commerce.
 Achievements (Cont.)
Lowered NAFTA reduced U.S. reliance on oil imports
Prices: from the Middle East and Venezuela.
NAFTA lowered food prices in much the same
way. In 2017, food imports from Mexico were
$26 billion and from Canada were $24 billion,
to total $50 billion. That's a 67% increase
from the $30 billion imported in 2008.
Without NAFTA, it's estimated that the food
industry would have to pay $2.7 billion more
annually to import goods.
Increased NAFTA boosted U.S. economic growth by as much
Economic as 0.5% a year. The sectors that benefited the
Growth: most were agriculture, automobiles, and services.
NAFTA increased farm exports because it
eliminated high Mexican tariffs. Mexico is the top
export destination for U.S. beef, rice, soybean
meal, corn sweeteners, apples, and beans. It is
the second-largest export destination for corn,
soybeans, and oils.
NAFTA boosted U.S. service exports to Canada
and Mexico from $25 billion to $106.8 billion in
between 1993 to 2007.
NAFTA eliminates trade barriers in most service
sectors, which are regulated. NAFTA requires
governments to publish all regulations, lowering
the hidden costs of doing business.
 Achievements (Cont.)
Created
NAFTA exports created 5 million net new
Jobs: U.S. jobs. Most of those jobs went to 17
states.
Imports from NAFTA partners also
created jobs.
Almost 40% of U.S. imports from Mexico
originated from American companies.
They designed the products
domestically, then outsourced some
portion of the process in Mexico.
Without NAFTA, they would have gone
to China. They may not have been
created at all.
Increased Since NAFTA was enacted, U.S. foreign direct
Foreign
Direct
investment (FDI) in Canada and Mexico has
more than tripled to $500.9 billion.
Investment:
NAFTA protected intellectual properties.27 It
helped innovative businesses by discouraging
pirating. It boosted FDI because companies
know that international law will safeguard their
rights.
NAFTA reduced investors' risk by guaranteeing
that they will have the same legal rights as local
investors. Through NAFTA, investors can make
legal claims against the government if it
nationalizes their industry or takes their
property by eminent domain
  People Lost Jobs
 Wage Suppress
Criticism  Mexico's Farmers Were Put Out of
Business
 Mexico's Environment Deteriorated
 Maquiladora Workers Were Exploited
 Criticism (Cont.)

People Lost Jobs:

Cheap labor in Mexico displaced

682,900 jobs in U.S.
116,400 job losses occurred in U.S
after 2007
The 2008 financial crisis caused
them nearly 80% of the losses, which
were in manufacturing industry.
The hardest-hit states were
California, New York, Michigan and
Texas.
 Criticism (Cont.)

Mexico's Farmers Were Put Out of

Business: Wage Suppress:

When NAFTA removed trade tariffs,
companies exported corn and other grains
to Mexico below cost. Rural Mexican
farmers could not compete.
At the same time, Mexico reduced its
subsidies to farmers from 33.2 percent of
total farm income in 1990 to 13.2% in
2001. Most of those subsidies went to
Mexico's large farms.
 Between 1993 and 1995, 50 percent of
all companies in the industries that
were moving to Mexico used the threat
of closing the factory.
 By 1999, that rate had grown to 65
percent.
 Criticism (Cont.)
Mexico's Environment Deteriorated:
 In response to NAFTA competitive
pressure, Mexico agribusiness used
more fertilizers and other chemicals,
costing $36 billion per year in pollution.
 Rural farmers expanded into marginal
land, resulting in deforestation at a rate
of 630,000 hectares per year.
Maquiladora Workers Were Exploited:
NAFTA expanded the maquiladora program by
removing tariffs. That's where U.S.-owned
companies employed Mexican workers near the
border.
. The workers had "no labor rights or health
protections," according to Continental Social
Alliance.
In addition, the working hours stretched out
12 hours or more, and if it is a woman, she was
forced to take a pregnancy test when applying
for a job.
 Evaluating NAFTA's value is not an easy or simple question.
Many believe that NAFTA is a success and without it, the
impacts of competition from the growing economies of the
European Union or China would be worse.
While some argue that NAFTA helped the U.S. fare the 2008
Conclusion financial crisis, other analysis suggests NAFTA may have
contributed to it. In addition, some of the ill effects associated
with NAFTA may be attributable to other causes, such as China
joining the World Trade Organization in 2001.
However, NAFTA was replaced by the United States-Mexico-
Canada Agreement (USMCA) as of July 1, 2020. It is hoped to
accomplish some good things for the economy of its member
countries and compete in the ever more globalized world.