PRESENTED BY: Dipak Kinjal Priya Varsha Prathamesh Sandeep

NAFTA is an agreement signed by the governments of the United states, Canada and Mexico creating a trilateral trade bloc in North America. Establishment: 1 January 1994

1988 Canada & US Canada & US FTA 1992 - Mastricht Treaty in Europe- Creation Of EU 1994 - CUFTA Incls Mexico Birth Of NAFTA

Membership: Canada, Mexico & United States Official languages: English, French and Spanish Administrative center: Mexico city, Ottawa, Washington GDP of NAFTA alliance: USD 12 trillion NAFTA supplements: NAAEC & NAALC

Goal : Eliminate trade barriers amongst members

Immediate - Tariff eliminated on more than 1/2 of US imports to Mexico & 1/3 of Mexican Imports to US All US Mexico tarrifs to be eliminated within 10 (Except Some Agri Exports) Mexico to remove all tariffs within next 15 Yrs US Canada Trade was already duty free. Seeks to eliminate non tariff barriers. yrs

NAFTA: What?
NAFTA was written to create a Free Trade Area in North America.
Free Trade means that countries may freely trade goods with each other

without having to pay a tariff (tax) on those goods.

In other words, free trade means no trade barriers.

NAFTA: Why?
The purpose of the agreement is to: Allow free movement of goods and services among the countries.
Promote competition in the free trade areas.

Protect the property rights of people and businesses in each country.

Be able to resolve problems that arise among the countries. Encourage cooperation among countries.

In 1988 Canada & the United States signed the Canada-United states Free Trade Agreement The American government then entered into negotiations with the Mexican government for a similar treaty Canada asked to join the negotiations in order to preserve its perceived gains under the 1988 deal The agreement NAFTA was signed by U.S. president - George H. W. Bush, Canadian prime minister - Brian Mulroney and Mexican president - Carlos Salinas in San Antanio, Texas on December 17,1992.

 To eliminate trade barriers & facilitate the cross-border movements

of goods and services between the parties

To promote conditions of fair competition To substantially increase investment opportunities To provide adequate and effective protection & enforcement of

intellectual property rights in each territory

To create effective procedures for the implementation and application

of this agreement ,for its joint administration & for resolution of disputes
To establish a framework for further trilateral, regional and

multilateral co-operation to expand and enhance benefits of this agreement

NAAEC created Commission for Environmental Co-operation (CEC) in 1994 Development of common priorities for the protection of certain species Developing North American Conservation Action Plans for three shared marine species Provide tools such as map of terrestrial eco-regions which management agencies are using in this programs Setting out common mechanism for planning and monitoring bird conservation programs

 NAALC members work together to protect, enhance and enforce the

basic rights of workers.

Establishment of institutions & creation of formal process to raise

concerns related to labor law enforcement directly with government

Undertaken a wide range of co-operative programs and technical

exchanges on industrial relations, occupational safety and health, child labor, gender equality, protection of migrant workers

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.

1.

Benefits the importers by reduced or duty free goods. Can make the exporter more competitive then other non participating countries There has been great increase in trade among the three countries and market access within each country also increased considerably. Mexicos poverty rate decreased and real income increased, even after economic crisis 1994-1995 NAFTA had been beneficial to business owners and elites in all three countries

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 Increase in productivity and growth is not very high

NAFTA resulted in a net loss of 394,834 jobs in first three years

itself
Many canadian and mexican people migrated to USA under

temporary status (TS) & treatys national dependent status (TDS)

Yet there is no net increase in employment level

Advantages
Free trade increases sales and profits for Mexico, Canada and the

U.S.A., thus strengthening their economies.

Lack of tariffs has allowed Mexico to sell its goods in the USA and

Canada at lower prices. This makes Mexican products more competitive in these markets and increases Mexicos profits as it tries to develop its economy.
Free trade is an opportunity for the U.S. to provide financial help to

Mexico by making jobs available in factories located there.

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

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

Member Country UNITED STATES

Contribution / Supply Technology, Services, and data processing, medical and space research and capital Mineral, forest products, energy and technological expertise Labors, Petroleum and agricultural products

CANADA

MEXICO

INDIAS EXPORT TO NAFTA in 2005-2006 Total USD 18,817.71 millions

INDIAS IMPORT FROM NAFTA in 2005-2006 Total USD 10472.22 millions

Indias Major Exports Items Precious Stones

Indias Major Import Items Sophisticated Machinery

Diamonds & Gold Jewellary Woven Apparel

Knit Apparel Fish & Seafood Iron/Steel Products Organic Chemicals

Electrical Machinery Medical & Surgical Equipments

Aircarfts, Space Crafts Plastic Wood Pulp Metals

Indias Major Export Items

Readymade Garments Gems, Jewellary & Precious Stones Engineering Goods Iron & Steel Articles

Indias Major Import Items Newsprint In Rolls Or Sheets

Copper Ores And Concentrates Peas Dried And Shelled

Iron Scrap, potash, Copper Wood Pulp Minerals Industrial Chemicals

Coffee
Spices Organic Chemicals

Indias Major Export Item

Indias Mojor Import Item Articles Of Iron Or Steel Iron & Steel Plastic & Articles Thereof Nuclear Reactor Medical Or Surgical Equipments Ores, slag And Ash Organic Chemicals

Transport Equipment
Drugs, Pharmaceutical Readymade Garments Inorganic/Organic Chemicals Machinery & Instruments Electronic Goods Dyes & Intermediaries

Overall Impact
NAFTA so far has enhanced Mexico's ability to supply American manufacturing firms with low cost parts Helped American firms get competitive. ( especially auto industry) Not helped Mexico turn into independently productive economy.

Disappointing progress in reducing the poverty in Mexico. Low tax base, Low education investment, High inequality, Competition with china

Till 2004 US Mfg in last 10 yrs was up 41% as compared to 34 % in the decade preceding 1994

Other Factors Besides NAFTA That Have Affected U.S. Trade with Mexico A sudden decline in the value of the peso at the end of 1994 (reduced U.S. exports to Mexico and increased U.S. imports from Mexico) Mexican recession in 1995 (lowered Mexico's demand for exports, including those of US) The long U.S. economic expansion that lasted through most of the 1990s (which increased U.S. demand for imports from all countries) Recessions in the US and Mexico 2000-2001 (Reduced Mexican and US demand) NAFTA Effect on Canada Benefited the most. Averaged 3.3% growth rates as compared to 2.7%. Canadian Manufacturing employment held stedy overall employment up to 15.7 mn in early 2000s from 14.9 mn NAFTA.
USs

pre

 Clearly not about cheap labor It is about integration of the North American marketplace It is about moving up the value-added chain It 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:

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

NAFTA has played an important role in the overall development of the three nations
1. 2. 3. 4.

The progressive elimination of tariffs & trade barriers, Dispute resolution Commitment to intellectual property & environment legislation Mutual entry into governmental bidding & the financial and other service sector But on the other hand it is also responsible for causalities like loss of jobs, migration, rising level of inequality and many others.