NAFTA

Presentation by Sunjuk Chakma

Presented to Dr. Dipali Shastri
 Contents
 Introduction
 Objectives
 Provisions
 Effects
 USMCA
 Changes in Provisions
 Introduction
• NAFTA stands for the ‘North American Free Trade Agreement’
• It is a trade bloc between the countries of North America: Canada, United
States & Mexico
• NAFTA was signed in 1992 by U.S. President George W Bush, Canadian
Prime Minister Brian Mulroney and Mexican President Carlos Salinas
• But it went into effect on January 1st, 1994 after Clinton was elected
president
• Was considered as the largest FTA in the world
• NAFTA was inspired by the success of EEC
• By 2008, tariffs on imports and exports were gradually eliminated
“It was on Oct. 7, 1992, under an old oak tree in downtown San Antonio that Mexican President Carlos
Salinas, U.S. President George Herbert Walker Bush and Canadian Prime Minister Brian Mulroney signed
the historic treaty that dropped trade barriers on the continent.”
 Objectives
• To eliminate barriers to trade and facilitate the cross-border
movement of goods and services
• To promote conditions of fair competition
• To increase investment opportunities
• Grant the signatories most favoured nation status
• Provide protection and enforcement of IPRs
• Create procedures for the resolution of trade disputes
• To establish a framework for further trilateral, regional and
multilateral cooperation to expand and enhance the benefits of this
agreement
 Provisions
• Gradual reduction of tariffs, customs duties between three member countries
• “National goods” status was provided to products imported from other
NAFTA countries
• Aimed at securing intellectual-property rights
• CANAMEX corridor- a series of highways
• Additional side agreements:
• Potential labour market in Mexico
• NAAEC- created CEC in 1994 > Disastrous effects of rapid industrialization,
lack of enforcing environmental regulations
• NAFTA were designed to give U.S. and Canadian companies greater access to
Mexican markets(banking, insurance,telecom)
Employees work at an American-owned factory located in Mexico
 Effects
• NAFTA produced mixed results
• Mexico’s dramatic increase in its exports $60b in 1994 to $400b in
2013
• Mexican consumers enjoyed better quality and lower-priced goods
• U.S. and Canada suffered greatly from economic recessions
• Mexico’s GDP grew at a lower rate compared to other Latin
American countries
• Lack of infrastructure in Mexico caused U.S. and Canadian firms to
choose not to invest directly
 USMCA/NAFTA 2.0
• United States-Mexico-Canada Agreement replaced NAFTA on Nov
30, 2018
• Signed by Trump, Trudeau and Enrique Pena Nieto
• Renegotiated under Trump administration
• Mexico ratified the agreement in 2019
• The agreement was signed by Donald Trump on Jan 29, 2020
• Canada's Parliament ratified it on Mar 13, 2020
• The agreement went into effect on July1st, 2020
 Changes in Provisions
• Automobiles- 75% of car’s components would have to be manufactured in
USMCA’s trade zone
• Labour- to improve working conditions for Mexico’s workers and to increase
wages
• Dairy and Agriculture- allows U.S. farmers access to upto 3.6% of the Canadian
market
• Intellectual property protections- 70years
• Treaty sunset provision- to be reviewed after 6years
• Investor-state dispute settlement mechanism- eliminated except for certain
Mexican industries
Thank You!