This document provides an overview of trade agreements, specifically NAFTA, and trade relationships between the US, Canada, and Mexico. It defines trade agreements and summarizes key aspects of NAFTA, including that it is a treaty that eliminates trade barriers between the three countries. Statistics are presented on trade volumes and balances between each pair of countries. Issues with NAFTA mentioned include that it is outdated and needs modernizing, and that trade deficits continue to be a concern, particularly for the US.

1. WHY ARETRADE
AGREEMENTS
IMPORTANTTO
COUNTRIES?
By: PaulYoung, CPA, CGA
February 11, 2017

2. Agenda
• What areTrade Agreements?
• What is NAFTA
• Trade between NAFTA countries
• Mexico and CanadaTrade
• USA and Mexico
• Canada and USA
• Issues at hand with NAFTA

3. What are trade deals?
• Source - http://www.businessdictionary.com/definition/free-trade-agreement.html
Treaty (such as FTAA or NAFTA) between two or more countries to establish a free trade area
where commerce in goods and services can be conducted across their common borders,
without tariffs or hindrances but (in contrast to a common market) capital or labor may not
move freely. Member countries usually impose a uniform tariff (called common external tariff)
on trade with non-member countries.

4. What is NAFTA
• Source - https://www.thebalance.com/nafta-definition-north-american-free-
trade-agreement-3306147
The North American FreeTrade Agreement is a treaty between Canada, the United States, and Mexico
that removes trade barriers. By eliminating tariffs, NAFTA increased investment opportunities.The
NAFTA agreement is 2,000 pages. It has eight sections and 22 chapters.
It's the world’s largest free trade agreement. Its members contribute more than $20 trillion as measured
by gross domestic product.

5. Mexico, Canada and USATrade
Source – Stats Canada and Bureau of EconomicAnalysis
December 2016
Exports
$23,504 Million
Imports
$19,110 Million
Surplus/(Deficit)
$4,393 Million
December 2016
Exports
$1,683 Million
Imports
$774 Million
Surplus/(Deficit)
$994 Million
December 2016
Exports
$23,311 Million
Imports
$21,161 Million
Surplus/(Deficit)
$2,150 Million

6. What does Mexico and CanadaTrade?
Source - http://www.lop.parl.gc.ca/Content/LOP/ResearchPublications/2012-60-e.htm
Commentary
• Capital Equipment trade is deficit
between Mexico and Canada
• Transportation equipment is deficit
between Canada and Mexico
• The only surplus is with agriculture and
food

7. Mexico and USATrade
• The trade deficit with Mexico was $63 billion. Exports were $231 billion, made up
primarily of auto parts, and petroleum products. Imports were $294 billion, with
cars, trucks and auto parts being the largest component. (Source: "U.S.Trade With
Mexico," "U.S. Exports to Mexico," "U.S. Imports from Mexico," U.S. Census.) -
Source – Balance “https://www.thebalance.com/trade-deficit-by-county-3306264”

8. Canada and USATrade
• Canada, the United States, and Mexico are partners in the world's largest trade
agreement, NAFTA.The U.S. trade deficit with Canada is $11 billion.That's only 2
percent of the total trade of $545 billion.The United States exports $267
billion, more than to any other country. It imports $278 billion. By far, the largest
export is automobiles and parts. Other large categories include petroleum
products, and industrial machinery and equipment.The largest import is crude
oiland gas from Canada's abundant shale oil fields. (Source: "Trade With
Canada," "U.S. Exports to Canada," "U.S. Imports from Canada," U.S. Census.) -
Source – Balance “https://www.thebalance.com/trade-deficit-by-county-3306264

9. NAFTA / Issues
• NAFTA is close to 30 years old and needs to be modernized
• USA is threatening punishing Mexco with import taxes.
• Import taxes will push up the cost of consumer goods
• Canada is export driven country, but needs to have better access to markets
• Pipelines
• Port Expansion
• Reducing red tape and regulations
• Mexico has not lifted people out of poverty despite new FDI
• http://www.ibtimes.com/mexicos-economy-rising-poverty-inequality-undermine-pena-nietos-economic-
agenda-2080010
• USA has trade deficit with both Canada and Mexico
• Mexico trade deficit is driven by automotive
• Canada trade deficit is driven by raw materials (Forestry, Metals and Energy)