NAFTA

International Marketing

 NAFTA North American Free Trade Agreement Type - Trilateral Trade Bloc Membership - Canada, Mexico, United States Signed in 1993 Date of establishment- 1 January 1994 Secretariats - Mexico City, Ottawa and Washington, D.C. Official languages - English, French and Spanish Supplements North American Agreement on Environmental Cooperation(NAAEC) & North American Agreement on Labor Cooperation(NAALC) Total Area - 21,783,850 km

Objectives of the NAALC: To improve working conditions and living standards in each Party's territory. To encourage publication and exchange of information, data development and coordination, and joint studies to enhance mutually beneficial understanding of the

INDICATOR

U.S

CANADA MEXICO

EASE OF DOING BUSINEES STARTING A BUSINESS REGISTERING PROPERTY GETTING CREDIT PAYING TAXES ENFORCING CONTRACTS TRADING ACROSS BORDERS PROTECTING INVESTORS

5 9 12 6 62 8 20 5

7 3 37 32 10 58 41 5

35 67 105 46 107 81 58 44

United States GDP (Nominal) 14,657 billion $ GDP(PPP) 14,657 billion $ GDP growth 1.60% Per capita GDP(Nominal) 47,284 $ Per capita GDP(PPP) 47,284 $ Currency Dollar Value against $ ---Services(% of economy) 76.9% Manufacturing(% of 21.9% economy) Agriculture(% of economy)1.2% Foreign Reserves Current Account Balance Stock Exchange Stock Market Index 143 Billion $ (-) 561 billion $ NYSE/ NASDAQ NYSE Composite, Dow Jones Industrial/ NASDAQ Composite, NASDAQ-100 13.39 trillion (USD)/ 4.72 trillion (USD)

Canada 1,574 billion $ 1,330 billion $ 2.20% 46,215 $ 39,057 $ Canadian Dollar 0.988 79% 19% 2% 64 billion $ (-) 40 billion $ Toronto Stock Exchange S&P/TSX Composite Index

Mexico 1,039 billion $ 1,567 billion $ 3.30% 9,566 $ 14,430 $ Peso 12.45 69.5% 26.6% 4% 131 billion $ (-) 7 billion $ BMV* IPC*

Market Capitalization of Stock Market

2170 billion (USD)

749 billion USD

Increase in trade 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. Total merchandise trade between Canada and the United States more than doubled between 1993 and 2008 with CAGR of 6.3% from 1994 to 2008. Trade between Canada and Mexico has more than quadrupled over the same period. Canada's trade in services with the United States and Mexico grew has doubled from $42.9 billion in 1993 to $86.5 billion in 2005. NAFTA created the world's largest free trade area Now links 450 million people producing $17 trillion worth of goods and services. As a result trade of US with Mexico and Canada is more than US trade with the whole of EU. Small Industries benefitted Pre NAFTA pact U.S. service providers that wanted to do business in Mexico had to establish a physical presence there which was very

US Exports to and Imports from Mexico (in rade among billions), 1989-2010 ners has

the NAFTA g from $6.4 .4 billion in

orted 51,000 new trucks value of $1.2

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.

NAFTA slightly increased growth in output and productivity The CBO study, which had a limited model for estimating the trade effects on GDP, found that NAFTA increased annual GDP growth in the United States by no more than .04%, and for Mexico, no more than 0.8%.

NAFTA had little or no impact on aggregate employment None of the reports attributed changes in aggregate U.S. or Mexican employment levels to NAFTA. The study's indicates that the reduction in net exports to Mexico has eliminated 227,663 U.S. job opportunities since 1993, and the reduction in net exports to Canada has eliminated 167,172 job opportunities in the same period. In total, NAFTA resulted in a net loss of 394,835 jobs in its first three years.

Implications of NAFTA on Indian Services exports: 1)No major effect due to the following reasons: Non-availability of abundant IT skilled labor in either of the countries, as compared to India. Implications of NAFTA on Indian Merchandise exports: 1) India is a major Textile Exporter with exports worth $ 32 billion projected this year, with US as one of the major market. This preferential treatment by US to Mexico could have harmful effect on Indian textile exports. The agreement were specifically designed to make US firms prefer Mexican manufacturers. 2) US annual Automotive accessories exports to Canada stands at $20 billion and to Mexico stands at $10 billion. India is a major exporter of Automotive accessories around the world, but due to NAFTA it is cheaper for Canadians & Mexicans to import Automotive accessories from US than India. 3) India is the Asia's largest Petroleum products exporter with exports

Need to understand Administrative laws. Geographically very far away. Language-wise India closer to US and Canada. Culturally India closer to Mexico. Lot of expatriates in US & Canada(Indians among the richest ethnicities in US). Slowing down economies, especially US. Lot of scope for Indian Services sector in these three countries. Cheap acquisitions in Mexico and Canada can pave way for US market. Highly competitive markets. Expensive labor.

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