Nafta ib project

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Evaluating NAFTA

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Nafta ib project

  1. 1. NORTH AMERICAN FREE <br />TRADE AGGREMENT<br />NAFTA<br />
  2. 2. Introduction<br /><ul><li> Administrative center ,Mexico City, Ottawa and Washington, D.C
  3. 3. Membership Canada  Mexico  United States
  4. 4. Estd- 01 Jan 994
  5. 5. 1988 – Canada & US – Canada & US FTA
  6. 6. 1992 - Mastricht Treaty in Europe- Creation Of EU
  7. 7. 1994 - CUFTA Incls Mexico – Birth Of NAFTA
  8. 8. Goal : Eliminate trade barriers amongst members
  9. 9. Immediate- Tariff eliminated on more than 1/2 of US imports to Mexico & 1/3 of Mexican Imports to US
  10. 10. All US Mexico tarrifs to be eliminated within 10 yrs (Except Some Agri Exports)
  11. 11. Mexico to remove all tariffs within next 15 Yrs
  12. 12. US Canada Trade was already duty free.
  13. 13. Seeks to eliminate non tariff barriers.</li></ul>MECHANISM: Chapter 20 deals with dispute resolution amongst the member states.. Modeled after Ch – 18 of US Canada FTA (5 Part mechanism)<br /><ul><li>Chapter 19 on antidumping and countervailing duties
  14. 14. Chapter 20 on general disputes.
  15. 15. Chapter 11 on investment
  16. 16. NAAEC ( North Am Agreement On EnvironmentalCo-Operation) Article 14-15 Citizen’sSubmission on EnvironmentalEnforcement.
  17. 17. NAAEC Part 5 Party-to-Party Disputes on Environmental Enforcement</li></li></ul><li> NAFTA- Hopes<br /><ul><li> Promote competition in free trade area
  18. 18. International Environment Maastricht Agreement & EU
  19. 19. Huge disparities between US & Mexico
  20. 20. Might reduce poverty in Mexico</li></li></ul><li>NAFTA - Fears<br />“Giant Sucking Sound” of Jobs & Investment<br />US workers loss- Mexican workers gain<br />US Trade Deficit<br />Environmental problems<br />
  21. 21. Impact of NAFTA<br /><ul><li>US JOBS
  22. 22. Trade
  23. 23. Effect on Mexico</li></li></ul><li>US JOBS<br />Manufactured Goods Deficit didn’t Grow from 2000 to 2009<br />
  24. 24. Trade Deficit & US JOBS<br /><ul><li> Only 8 % of US manufactured goods Trade deficit has been with NAFTA
  25. 25. 92 % of the trade deficit was with ROW</li></ul>Does Not Account for 5 mn Lost Jobs<br />
  26. 26. 76 % Of Mexican Trade is oriented towards USA<br />Trade Amongst NAFTA<br />
  27. 27. Effect On GDP<br />Mexico’s 76 % Trade orientation towards US should have accounted for commensurate growth in Mexico<br />
  28. 28.
  29. 29. Macroeconomics - Mexico<br />
  30. 30. Poverty levels<br />No Change in Poverty Levels/ South has remained untouched by NAFTA<br />
  31. 31. Agriculture<br />Tariffs removal for agricultural produce is Exempt under NAFTA.<br /> Yr 2000 US Corn Subsidies totaled $ 10.1 bn against $ 5 Bn Mexico’s total Agri Export to US<br /><ul><li> Agriculture contributes 8 percent to Mexico’s gross domestic product (GDP) and employs about 22 percent of the labor force (about 8 million workers).
  32. 32. For the United States, agriculture comprises only 2 percent of GDP and employs about 2.7 percent of the labor force (a bit under 4 million workers).</li></li></ul><li>Maquiladoras Effect<br />Factories, Called Maquiladoras, are built on Mexican border and workers are hired there to make goods at much lower wages than USA<br />Min Wages – USA- $5.15/h<br /><ul><li>Mexico- $ 3.4 / Day</li></ul>( Global Compensation Watch, The NAFTA Index, 1998)<br />Most production is Assembly operation rather than independent production<br />
  33. 33. Companies with <br />3 Day Blinds <br />20th Century Plastics <br />Acer Peripherals <br />Bali Company, Inc. <br />Bayer Corp./Medsep <br />BMW <br />Canon Business Machines <br />Casio Manufacturing <br />Chrysler <br />Daewoo <br />Eastman Kodak/Verbatim <br />Eberhard-Faber <br />Eli Lilly Corporation <br />Ericsson <br />Fisher Price <br />Ford <br />Foster Grant Corporation <br />General Electric Company <br />JVC <br />GM <br />Hasbro <br />Hewlett Packard <br />Hitachi Home Electronics<br /><ul><li>Honda
  34. 34. Honeywell, Inc.
  35. 35. Hughes Aircraft
  36. 36. Hyundai Precision America
  37. 37. IBM
  38. 38. Matsushita
  39. 39. Mattel
  40. 40. Maxell Corporation
  41. 41. Mercedes Benz
  42. 42. Mitsubishi Electronics Corp.
  43. 43. Motorola
  44. 44. Nissan
  45. 45. Philips
  46. 46. Pioneer Speakers
  47. 47. Samsonite Corporation
  48. 48. Samsung
  49. 49. Sanyo North America
  50. 50. Sony Electronics
  51. 51. Tiffany
  52. 52. Toshiba
  53. 53. VW
  54. 54. Xerox
  55. 55. Zenith</li></ul>Maquiladoras<br />
  56. 56. Overall Impact<br /><ul><li>NAFTA so far has enhanced Mexico's ability to supply American manufacturing firms with low cost parts
  57. 57. Helped American firms get competitive. ( especially auto industry)
  58. 58. Not helped Mexico turn into independently productive economy.
  59. 59. Disappointing progress in reducing the poverty in Mexico.
  60. 60. Low tax base, Low education investment, High inequality, Compition with china
  61. 61. No “ Giant sucking sound” of jobs and investment.
  62. 62. Till 2004 US Mfg in last 10 yrs was up 41% as compared to 34 % in the decade preceding 1994</li></ul>Other Factors Besides NAFTA That Have Affected U.S. Trade with Mexico<br /><ul><li> 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)
  63. 63. Mexican recession in 1995 (lowered Mexico's demand for exports, including those of US)
  64. 64. The long U.S. economic expansion that lasted through most of the 1990s (which increased U.S. demand for imports from all countries)
  65. 65. Recessions in the US and Mexico 2000-2001 (Reduced Mexican and US demand)</li></ul>NAFTA EFFECT ON CANADA<br /><ul><li>Benefited the most. Averaged 3.3% growth rates as compared to US’s 2.7%.
  66. 66. Canadian Manufacturing employment held stedy
  67. 67. overall employment up to 15.7 mn in early 2000s from 14.9 mn pre NAFTA.</li>

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