Although NAFTA is between Canada, U.S. and Mexico, this presentation will focus specifically on trade between U.S. and Mexico. The purpose is to present a nonbiased look at NAFTA, although both views will be examined.
Katy Haas Coordinator, Alianzas www.alianzas.us The North American Free Trade Agreement
Index <ul><li>Why Enter a Free Trade Agreement? </li></ul><ul><li>What is NAFTA? </li></ul><ul><li>Background of NAFTA </li></ul><ul><li>Reaction after Implementation </li></ul><ul><li>The Mexican Peso Crisis </li></ul><ul><li>What about America’s Farmers? </li></ul>
<ul><li>Impact on: </li></ul><ul><ul><li>Employment </li></ul></ul><ul><ul><li>Immigration </li></ul></ul><ul><ul><li>Environment </li></ul></ul><ul><li>Trucking industry </li></ul><ul><li>Missouri’s role </li></ul><ul><li>NAFTA’s future </li></ul><ul><li>Conclusion </li></ul>“ Mexico is the most important country to the United States in the 21st century” --President George W. Bush Sept. 5, 2001
Levels of Economic Integration *If the policies are not just harmonized by separate governments, but have a unified government with binding commitments on all members, then you reach political integration and have “full economic integration”.
What is NAFTA? Effective as of January 1, 1994 A trade agreement between CANADA, MEXICO, and the UNITED STATES which provides for the elimination of tariffs on North American goods shipped among the three countries.
Background of NAFTA An Introduction Zedillo Clinton Salinas Marcos
UNITED STATES: Would solidify an expanding trade relationship, which would spur job creation at home and help to continue the revolutionary shift throughout Latin America away from state controlled markets toward freer markets. MEXICO: Lower inflation and foreign debt; create more well-paying jobs for Mexicans, thus producing less incentive for Mexicans to work illegally in the U.S.; Mexico would become a richer market for American exporters. Would exert presidential authority, improve inter-American relations and advance the cause of global trade liberalization. Expectations and Goals
Reaction After Implementation How the Countries Were Affected Immediately How They Are Affected Now
Top U.S. 1. Aircraft 2. Electronic Computing Equipment 3. Motor Vehicle Parts 4. Motor Vehicles 5. Semiconductors 6. Aircraft/Space/Missile Parts 7. Chemicals 8. Plastics 9. Airplane Engines/Parts 10. Refined Petroleum Products 1. Motor Vehicles 2. Oil/Natural Gas 3. Motor Vehicle Parts 4. Semiconductors 5. Electronic Parts and Imports Exports
NAFTA Pros <ul><li>Goods/Services at lower cost </li></ul><ul><li>Most underdeveloped countries gain the most (i.e. standards of trade increased) </li></ul><ul><li>Tariffs reduced </li></ul><ul><li>Jobs created </li></ul><ul><li>Mexico’s economy is growing again </li></ul>
NAFTA Cons <ul><li>Fuel for peso crisis </li></ul><ul><li>Benefits Mexico more than the U.S. </li></ul><ul><li>U.S. deficit with trading partners </li></ul><ul><li>Loss of low-wage American jobs to Mexico </li></ul><ul><li>Environmental problems </li></ul><ul><li>Traffic congestion and delays along the borders </li></ul>
The Mexican Peso Crisis Was NAFTA to Blame? Wages in United States and Mexico
What about America’s Farmers? BENEFITS: More export opportunities. Since NAFTA was approved in 1993, U.S. agricultural exports to Mexico have nearly doubled. DISADVANTAGES: Face regulations that increase the costs of production while foreign competitors gain from cheap production and labor.
Impact on: Employment <ul><li>Was U.S. workers’ loss Mexican workers’ gain? </li></ul><ul><li>Maquiladora - Primarily foreign-owned assembly plants </li></ul><ul><li>Jobs lost to Mexico vs. Jobs supported by exports to Mexico and Canada </li></ul>
Impact on: Immigration <ul><li>In the 1990s, U.S. population grew 13.2%, with 60% growth of Mexican immigrants. </li></ul><ul><li>Among Latinos nationwide, 26% are between the ages of 25-40. </li></ul><ul><li>Remittances from Mexicans working in the U.S.: $6.65 billion (for 2001 through 3rd quarter) </li></ul><ul><li>Increase in Mexican migrants led to increase in Border Patrol staff </li></ul>
Impact on: Environment NAFTA Environmental Agreements: North American Agreement on Environmental Cooperation (NAAEC) - commission to enforce environmental law. Border Environment Cooperation Commission and the North American Development Bank - commission to address pollution problems along the U.S.-Mexican border
Trucking Industry The areas of concern include: vehicle safety, driver training, environmental issues and possible illegal drug trafficking. A recent investigation determined that the average 18-wheeler in Mexico is 40% overloaded, carrying a gross vehicle weight of more than 120,000 pounds. If U.S. truckers operated at a similar overcapacity, interstate highways would have a life span of 14 years, as opposed to their 40-year design life.
Canada and Mexico are Missouri’s first- and second-largest export markets, respectively, accounting for 50.5% of Missouri’s total exports 1999. Between 1994 and 1999, Missouri exports to NAFTA partners increased 63.4%. Missouri’s Role (continued)
Mid-Continent International Trade Corridor 1. A trade pattern 2. A system of connecting highways and rail routes 3. An opportunity to strengthen economic development in a region
The Missouri-Mexico Partnership <ul><li>The Missouri Department of Economic Development moved its hub to Monterrey </li></ul><ul><li>Branch office in Guadalajara </li></ul><ul><li>For the past 12 years, the Missouri Department of Agriculture’s headquarters has been in Guadalajara </li></ul>
NAFTA’s Future Where is it going and what effects will it have? U.S.-Central American Free Trade Agreement Free Trade Area of the Americas (FTAA)