It's about North American Free Trade Agreement.

1. N A F T A
Promises and Consequences…
MD Siyam Hossain
Bangladesh Institute of Business & Technology
Narayangonj,Dhaka
Dhaka,Bangladesh

2. Overview
 Tarun Biju – Introduction
 Indranil Dutta – Opposition
– Impacts on Canada
 Nola Lamoureux – Ross Perot’s Prediction
– Impacts on USA
 Arpan Munier – Renegotiation
– Impacts on Mexico
 Tarun Biju – Conclusion
MD Siyam Hossain

3. NAFTA - Introduction
 Each NAFTA country retains its external tariffs vis-à-vis
non-members' goods
 Levies a lower tariff on the goods "originating" from the
other NAFTA members
 Differences in the sizes of the 3 participating nations –
USA (88.4% ~ US 10.4 trillion), Canada(6.2%) and
Mexico(5.4%) of NAFTA area GDP
 Phasing out of tariffs over a period of 14 years since its
inception on 1st
January 1994.
 Individual companies can sue countries in case of
legislation that hamper outcomes from their investments
MD Siyam Hossain

4. Some of the promises
 Freer access to new markets (e.g. US
agriculture)
 Creation of new jobs
 Increase in the standard of living (especially in
Mexico)
 Improved environmental conditions
MD Siyam Hossain

5. Opposition
 Labour Unions in US and Canada
 loss of jobs to Mexico
 Politicians
 fear of ‘branch plant’ economy
 Farmers in Mexico
 agricultural subsidies in US
 Environmental and social justice organizations
 adverse environmental impacts
 loss of control over domestic policy making
MD Siyam Hossain

6. Impacts on Canada
Canada – US: (1989 – 2002)
 US exports to Canada – 100%(↑)
 US imports from Canada – 133% (↑)
Canada – Mexico: (1989 – 2002)
 Canadian exports to Mexico – $3.2 billion
 Canadian imports from Mexico – jumped five
fold to $13.2 billion.
MD Siyam Hossain

7. Impacts on Canada
 6% growth in bilateral trade with a 40% appreciation to
CDN$
 Trade & linkages growth
 Force companies to improve to compete in North
America, therefore they are better able to compete
globally
 Border problems and unfinished business (softwood
lumber) ~ capped to 34%
 Canadian farmers effected by lower prices
MD Siyam Hossain

8. Perot’s predictions
 No SUCKING sound!
 Jobs were created in Mexico, but there was
no net loss of jobs in the US.
 Many jobs moved, but many jobs were
created.
 E.g. Michigan the unemployment rate was
3.2% in Aug 1999.
MD Siyam Hossain

9. Impacts on the U.S.
 Relaxed investment restrictions
 Helped US deal with European competitors in
Mexico
 Manufacturing jobs in the US declined
 Wages remain stagnant
 US workforce shifting from manufacturing to service jobs
 Increased differences in income
 Weakening of unions
 Increase in competition
 Strengthening of multinational companies
 Increase in insecurity
MD Siyam Hossain

10. Impacts on the U.S.
 Certain industries (automobiles) benefited
greatly.
 US Independent Truckers are opposed to
giving Mexican truckers greater access to the
US. (Aug 2006)
 Agribusinesses (ADM, Cargill) benefited over
independent farmers.
 Volume of trade has increased
 Prices paid to farmers decreased
MD Siyam Hossain

11. Renegotiation
 Lopez Obrador rejects the opening of
Mexico’s corn & bean markets to US exports.
 Transition has been slow so he is trying to
convince people to go back to the old ways, a
centrally planned economy.
 Appeals to rural Mexicans who did not benefit
from NAFTA
MD Siyam Hossain

12. Impacts on Mexico
 Success of Mexican “maquiladoras”
 Labour intensive units, imports inputs from the US, processes
them for re-export.
 Increased employment for Mexicans, increased supply for the
US, ensuring lower prices
 For Mexico : “trade without development” (Wise and
Gallagher)
 Foreign investment increased, exports grew, employment rose
 Crowding to urban areas, adverse environmental effects
 Companies shifting to Asia to lower costs, manufacturing sector
in decline. Cannot fight poverty by trade alone.
MD Siyam Hossain

13. Impacts on Mexico
 Migration of Mexicans campesinos to the US
due to loss of farming income
 Remove quotas and price floors.
 Loss in biodiversity due to the monoculture nature of
agribusiness.
MD Siyam Hossain

14. References
 http://www.dfait-maeci.gc.ca/eet/research/nafta/nafta-en.asp#part
 http://www.citizen.org/trade/nafta/
 http://www.dollarsandsense.org/archives/2003/0103dollar.html
 http://www.yaleeconomicreview.com/issues/spring2005/nafta.php
 http://www.citizen.org/documents/NAFTA_10_ag.pdf
 http://www.citizen.org/documents/NAFTA_10_mexico.pdf
 http://www.citizen.org/documents/NAFTA_10_jobs.pdf
 Border conflict, Keane, A.. Journal of Commerce. New York:Aug 7, 2006. p. 33
 Mexican Watershed, Wall Street Journal. (Eastern Edition ). New York:Jun 29, 2006. p. A.14
 Jesse vs. the Sour Grapes, Wall Street Journal. (Eastern Edition ). New York:Sep 20, 1999.
p. A28
 NAFTA at eleven, Cooper, J. CMA Management. Hamilton:Oct 2005. Vol. 79(6), p. 52-53
(3 pp.)
 World economy: Not all Nafta foes are Perot followers, but their opposition runs just as deep
Keatley, R. Wall Street Journal. (Eastern Edition ). New York,:Nov 12, 1993. p. PAGE A11
 Nafta's Birthday Party, O'Boyle, M. Business Mexico. Mexico City:Feb 2004. Vol. 14(2), p. 28-33
(6 pp.)
 Why labor hates NAFTA, Richman, L. Fortune. New York:Nov 15, 1993. Vol. 128(12), p. 28
(1 pp.)
 NAFTA and illegal immigration, Field, A. Journal of Commerce. New York:May 22, 2006. p. 1
MD Siyam Hossain