NAFTA

North American Free Trade Agreement

FOUNDER COUNTRIES

- 1994
- CANADA
- UNITED STATES
- MEXICO
- Formed the world’s largest free trade area
- To foster free trade amongst the member countries

NAFTA Overviews (conti…)

 Fully implemented on January 1, 2008.
 Most successful trade agreements in history.
 Contributed to significant increases in agricultural trade and
investment between threes.
 Benefited farmers, ranchers and consumers throughout North
America.

WHY ENTER A FREE TRADE AGREEMENT:

Why NAFTA is Important ?
- Eliminates tariffs.
- Everyone benefits because goods are at a lower cost.
- The most underdeveloped country/partner gains the most - we help
them develop.
- Economic liberalization.
- Effects :Privatization, less governmental control; Increased
competitiveness; Higher specialization resulting in a shifting of
Sectors (example: Corn in Mexico); Lower costs to consumers
- Believes in freedom from governmental controls and the role of the
state in protecting those rights. Believes that natural market forces
should determine economic activity.

The following is a listing of goals as set forth in NAFTA’s preamble:

- To strengthen bonds of friendship and cooperation
- To act as a catalyst to international cooperation
- To create, expand, and secure future markets , To establish fair rules
of trade
- To ensure a predictable framework for business planning , To enhance
firms competitiveness in foreign markets
- To foster creativity and innovation ,create new employment
opportunities
- To promote development & strengthen environmental regulations

NAFTA IN PERSPECTIVE

 U.S. two-way trade with Canada and Mexico exceeds U.S. trade with
the European Union and Japan combined.

 In fact, US trade more in a month to Mexico than with all the other
countries in a year. US export more to Mexico in a day than with Paraguay
in a year.

 US export more in a week with Canada than with Central America in

a year
NAFTA IN PERSPECTIVE

 U.S. two-way trade with Canada and Mexico exceeds U.S. trade with
the European Union and Japan combined.

 In fact, US trade more in a month to Mexico than with all the other
countries in a year. US export more to Mexico in a day than with
Paraguay in a year.

 US export more in a week with Canada than with Central America in

a year
EFFECTS OF NAFTA
 BENEFITS
 NAFTA eliminates trade barrier
 Benefit’s the importers by reduced or duty free goods.
 Can make the exporter more competitive then other non-
participating countries
 200% increase in trade among the 3 countries.
 Increase market access within each country.

Impact on Environment

 Two agreements.
1. One was the North American Agreement on Environmental
Cooperation (NAAEC), which created a commission to enforce
environmental law. But the commission was not fully staffed
until 1995 and has had a slow start.
2. The other agreement created the Border Environment
Cooperation Commission and the North American
Development Bank to address pollution problems along the
U.S.-Mexican border.
 Currently, NAFTA trade contributes significantly to air pollution in all
the corridors. Truck idling associated with border crossing delay
contributes significantly to CO emissions, particularly in corridors
where border delay is problematic. As much as 6% of all trade-related
CO emissions in the corridors are caused by truck idling.

NAFTA FUTURE

- Much like the Canadian FTA was expanded to NAFTA...

- The negotiation with Central America will complement the goal of
completing a Free Trade with the Americas (FTAA) by Jan. 2005.
The U.S. exported $9 billion in goods to the five Central American
countries in 2001, up 42% since 1996.
- The U.S. is the main supplier of goods and services to Central
American economies: 40% of total goods imports by CA come from
the U.S. U.S. products face a competitive disadvantage in the region,
because CA countries have been very active in negotiating free trade
agreements that do not include the U.S. More than 20 trade
agreements grant preferences in CA to products from Mexico,
Canada, Chile, and several South American nations.
NAFTA SUPPLEMENTS

 The North American Agreement on Environmental Cooperation

(NAAEC)

 The North American Agreement on Labour Cooperation (NAALC)

CONCLUSION

- NAFTA is one of the most successful treaties of the times in terms of

growth in trade i.e. imports & exports , G.D.P etc. but on the other
hand it is also responsible for causalities like loss of jobs, migration,
rising level of inequality and many others.

- Thus it is important that the treaty should be carried forward

concerning about taking steps for the problems originated due to
NAFTA ,otherwise it will create inequality in many terms which can
lead to bad conditions in future for all the three countries.