This presentation looks at NAFTA agreement. The presentation covers trade issues as well as the issues facing NAFTA.

1. NAFTA (NORTH
AMERICANTRADE
AGREEMENT)
By: PaulYoung, CPA, CGA
October 16, 2017

2. PaulYoung - Bio
• CPA, CGA
• Academia (PF1, FA4 and MS2)
• SME – Risk Management
• SME – Close, Consolidate and Reporting
• SME – Public Policy
• SME – EmergingTechnology
• SME – Financial Solutions
• SME – Business Process Change
• SME – Supply Chain Management
Contact information:
Paul_Young_CGA@Hotmail.com

3. 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

4. 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.

5. 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.

6. 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

7. 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

8. 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”

9. 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

10. NAFTA / Issues
• NAFTA is close to 30 years old and needs to be modernized
• USA is threatening punishing Mexico 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)

11. NAFTA / Latest News – PM of Canada
• http://www.ctvnews.ca/politics/trump-to-reveal-desired-changes-for-nafta-renegotiation-1.3504957
CTV News – July 16, 2017

12. Canadian Premiers
Source - http://globalnews.ca/news/3602057/canada-premiers-meeting-edmonton/
GlobalTV – July 16, 2017

13. USA Governors
Source - http://www.macleans.ca/economy/u-s-governors-tell-trudeau-they-want-nafta-to-survive/
Macleans Magazine – July 14, 2017

14. USA and NAFTA (Issues)
Source - https://www.reuters.com/article/us-trade-nafta/grim-reality-of-nafta-talks-sets-in-after-tough-u-s-demands-
idUSKBN1CJ0TH
• Automotive Content (local content) - One of the U.S. proposals unveiled this week would
require that 50 percent of the value of all NAFTA-produced cars, trucks and large engines
come from the United States, people briefed on the negotiations said.
• Agricultural Sector - U.S. negotiators also want to end a trade dispute settlement system that
has deterred U.S. anti-dumping cases while erecting new protective barriers for seasonal fruit
and vegetable growers. And though Canada and Mexico had sought more access to U.S.
government procurement contracts, they were met this week with a proposal that would
effectively grant them less.
• Meanwhile, theTrump administration’s call for a so-called NAFTA sunset clause would
effectively trigger a renegotiation of the pact every five years.
• Canada opens their market up to dairy imports from the USA
• Elimination of Softwood lumber subsidies (WTO dispute)

15. What is Canada pushing?
• Social agenda (Agenda 2030) – USA pull out of the Paris Accord)
• Protection of Canada’s supply management system
• Keeping of the dispute mechanism

16. RebuttalTrade

17. Rebuttal#1 - NAFTA
• https://beta.theglobeandmail.com/news/politics/trudeau-trump-hope-to-reach-nafta-deal-
by-end-of-the-year-white-house/article36138353/?click=sf_globefb
• The timeline is very tight asTrudeau and his team keep pushing both social and climate
change policies on to the NAFTA. I am all about the environment, but there needs to be a
balance.Trudeau and his team are all about pushing agenda 2030 -
https://www.slideshare.net/paulyoungcga/what-is-agenda-2030
• Canada also is siding too much with Mexico and that is also wrong. Canada has large trade
deficit with Mexico as such PM Selfie should be aligning more withTrump -
https://www.slideshare.net/paulyoungcga/government-policies-for-mexico-may-2016
•

18. Rebuttal #2 – Job Quality
• Here is my blog on skills trades:
• http://www.huffingtonpost.ca/nobina-robinson/canada-skilled-trades_b_14136620.html
• There is lots of misconception about the skills trade in Canada, especially who is responsible. Each province is responsible for post-secondary education - http://dev.cfswpnetwork.ca/wp-
content/uploads/sites/71/2015/07/Fact-Sheet-Funding-2013-11-En.pdf
• Government also have to be careful when making promises like free education
• http://business.financialpost.com/fp-comment/why-free-tuition-helps-all-the-wrong-students
• There is no such thing as free education as someone else has to pay for it through taxation dollars.
• There are structural issues with education that seems to never be address by provincial governments as part of the money they received via the CST Transfer - http://www.fin.gc.ca/fedprov/cst-eng.asp
• AIT has said there are barriers to trade including the LP in Ontario clauses that support unions: http://www.slideshare.net/paulyoungcga/internal-trade-canada or
http://www.canada.com/news/national/Wall+lays+Sask+stance+local+procurement/10436173/story.html
• Skill Gaps - http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-news/research/publications/do-labour-shortages-exist-in-canada.pdf. Who trains Electricians, Welders, Plumbers, etc.?
http://www.parl.gc.ca/Content/LOP/ResearchPublications/cei-16-e.htm or http://www.sunnewsnetwork.ca/sunnews/politics/archives/2014/11/20141110-183419.html
• Harper has double the transfers as such portion of the transfers relates to education, but you said nothing about that in your posts, why? http://www.slideshare.net/paulyoungcga/provincial-transfers-and-program-spending/
It is not Harper’s fault that Wynne decided to use the money to expand University spots, instead of the trades: http://www.wlufa.ca/the-implications-the-2014-ontario-election-for-higher-education
• Loans for Trades - http://www.vancouversun.com/business/Harper+announces+loans+Canadian+trade+apprentices+Delta+appearance/10712329/story.html
• Skills gaps analysis: http://static1.1.sqspcdn.com/static/f/1493895/25691274/1416506638937/Final+Skills+Shortage+CFCM+October+2014+1.pdf?token=Rcc8u8l28HLLo1q1T9eLjYlq%2BcE%3D
• Job Outlook - https://www.youtube.com/watch?v=TulkPgfR-R0
• Millennials Strategy - https://www.youtube.com/watch?v=EoRxR7OpEK0
• Education - https://www.bloomberg.com/news/articles/2017-07-28/unions-urge-slow-down-as-self-driving-car-bills-pick-up-speed

19. Rebuttal #3 -Trade
• Here is what I said on balance of payments as it ties to the latest trends - http://frontstreetcapital.com/commentary/canadian-equity-q4-2015
• Mulcair quote - http://www.cca-acc.com/en/information/election-2015/where-the-leaders-stand/thomas-mulcair “However, it is obvious that Canada can and must do better.
Our current account went from a surplus of $19 billion in 2006 to a deficit of $62 billion in 2014, and March,April, and May 2015 were the three worst months of trade deficit in
Canada’s history”
• Comments on Balance of Payments:
• Corporate profits outflows as part of the balance of payments deficits. If there are more Canadian companies investing and succeeding in Canada, then there are more profits
staying in Canada. Unfortunately, you will never hear the NDP and LPC comment on the details when it comes to balance of payments.
• Over the past month there has been little discussion on the economy other than snippets from either LPC or NDP.
• The opposition makes it sound GDP is easy fix when it fact it is not.There are many factors that driveGDP including Exports.Yet the LPC and NDP have said little on the
various policies that drivesGDP.There have been statements like more money for forestry, aerospace, automotive, etc., but no clear path on how to support investment and
trade deals - http://www.slideshare.net/paulyoungcga/canada-gdp-analysis-2015
• China controls the bulk of the rare metals - http://www.avalonraremetals.com/_resources/presentations/Corporate_Presentation.pdf. Rare metals are key to renewable
energy, but little is said by either NDP or LPC when it comes to a made in Canada solution including the extraction/refining of rare metals, vanadium, lithium, etc.Yet Green
Energy is key platform for both the NDP and LPC - http://www.slideshare.net/paulyoungcga/federal-policy-analysis-green-technology-canadaa
• NDP and LPC like to highlight balance of international payments as way to say Harper is failing - http://www.statcan.gc.ca/tables-tableaux/sum-som/l01/cst01/econ01a-
eng.htm. It is all big words to highlight negativity, but never details. Balance of Payments has many facets including FDI, investment income, etc.
http://www.statcan.gc.ca/eng/nea/about/bp
• So, if the NDP and LPC think they have easy fixes for the above issues then call their bluffs, because there is no easy fix.

20. Rebuttal#4 -Trade
• NDPer,
• It is funny how you make comments on China, like Harper sold Canada out!Yet you provide no links/facts that support your claim. I bet you will come back to me with links to
Huffington Post or iPolitics or maybe Mike Harris (Unifor supporter), right
• TPP 101 - https://www.youtube.com/watch?v=X5zc7tWUr44
• Have you look at the deal or are you taking sound bites from the NDP or other parties? Here is what key people say about FIPA:
• CME - http://www.cme-mec.ca/?lid=JCKNC-E742G-1W6JA&comaction=show&cid=3BQUJ-U9UKB-6PRJU
• CAPP http://business.financialpost.com/2014/12/06/level-playing-field-why-a-chinese-currency-hub-will-help-boost-canadas-oil-sector/?__lsa=3b29-0e59
• Here is what is says on lawsuits:
• In two decadesCanada has lost lawsuits, however, the money is peanuts in terms of the overall spending. http://www.huffingtonpost.ca/2015/01/14/canada-sued-investor-
state-dispute-ccpa_n_6471460.html. I quoted Huffington Post as way to show the LPC bias towards the lawsuit.This article says 20 years as such it goes to show with all the
trade over the past 20 years the value of the lawsuits is peanuts. Let’s say exports are $400B on average for 20 years then that means 8 trillion of exports and only $175M in
lawsuits. I think that is a pretty good loss ratio, right?
• FIPAVideo - https://www.youtube.com/watch?v=aig1N_iv39o
• If you like I can go into more aspect of exports? For each $1B of exports there is 5,500 new jobs. How come you did not mention that comment?
http://business.financialpost.com/2013/04/18/trudeau-favours-trade-so-far-so-good/.
• How about a looking at other trade deals with growing economies like Colombia or South Korea other nations?
• ColombiaTrade with Canada - http://www.cme-mec.ca/?lid=JCKNC-E742G-1W6JA&comaction=show&cid=ZN8E6-5D4S5-R8TRX or http://www.ibtimes.com/colombia-
surpasses-argentina-latin-americas-third-largest-economy-due-inflation-currency-changes-gdp
• South Korea - http://www.thestar.com/news/canada/2014/03/11/who_will_be_winners_losers_in_korea_deal.html
• I can go into other deals like Europe or other countries. I think you will ignored the links as such there is no point for me to waste any more time with my post!
• Trade and investment deal are very key as it is difficult for Canadian companies to expand into various countries due to protectionist policies of various governments!