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What is nafta
1. PRESENTATION
ON
REGIONAL TRADE BLOCKS
SPECIAL THANKS TO: PRESENTED BY
Dr. P CHAKRAVARTHI K. NARESH
REG NO 7085
2. Different regional trade blocs.
What is NAFTA?
The Elimination of Trade Barriers.
When is NAFTA Started?
Why was NAFTA formed?
Advantages.
Disadvantages.
NAFTA in US
Exports.
Imports.
Trial Balance.
Investment.
4. NAFTA is short for the North American Free Trade
Agreement. NAFTA covers Canada, the U.S.
and Mexico making it the world’s largest free trade
area (in terms of GDP). NAFTA was launched 20 years
ago to reduce trading costs, increase business
investment, and help North America be more
competitive in the global marketplace.
As of January 1, 2008, all tariffs between the three
countries were eliminated. Between 1993-2009, trade
tripled from $297 billion to $1.6 trillion.
5. NAFTA helped to eliminate a number of non-tariff measures affecting
agricultural trade between the United States and Mexico. Prior to January 1,
1994, the single largest barrier to U.S. agricultural sales was Mexico’s import
licensing system. However, this system was largely replaced by tariff-rate
quotas or ordinary tariffs.
All agricultural tariffs between Mexico and the United States were eliminated as
of January 1, 2008. Many were immediately eliminated and others were phased
out over transition periods of 5, 10, or 15 years. The immediate tariff eliminations
applied to a broad range of agricultural products. In fact, more than half the
value of agricultural trade became duty free when the agreement went into
effect. Tariff reductions between the United States and Canada had already been
implemented under the CFTA
Both Mexico and the United States protected their import-sensitive sectors
with longer transition periods, tariff-rate quotas, and, for certain products,
special safeguard provisions. However, now that the 15-year transition period
has passed, free trade with Mexico prevails for all agricultural products. NAFTA
also provides for strict rules of origin to ensure that maximum benefits accrue
only to those items produced in North America.
6. NAFTA was signed by President George H.W. Bush,
Mexican President Salinas, and Canadian Prime Minister
Brian Mulroney in 1992. It was ratified by the legislatures
of the three countries in 1993.
The U.S. House of Representatives approved it by 234 to
200 on November 17, 1993. The U.S. Senate approved it by
60 to 38 on November 20, three days later.
It was signed into law by President Bill Clinton on
December 8, 1993 and entered force January 1, 1994.
Although it was signed by President Bush, it was a priority
of President Clinton's, and its passage is considered one of
his first successes.
7. Article 102 of the NAFTA agreement outlines its
purpose: Grant the signatories Most Favored
Nation status.
Eliminate barriers to trade and facilitate the cross-
border movement of goods and services.
Promote conditions of fair competition.
Increase investment opportunities.
Provide protection and enforcement of intellectual
property rights.
Create procedures for the resolution of trade disputes.
Establish a framework for further trilateral, regional
and multilateral cooperation to expand NAFTA's
benefits.
8. NAFTA created the world’s largest free trade area. It
allows the 450 million people in the U.S., Canada and
Mexico to export to each other at a lower cost. As a
result, it is responsible for $1.6 trillion in goods and
services annually. Estimates are that NAFTA increases
the U.S. economy, as measured by GDP, by as much as
.5% a year.
NAFTA Increased Trade in All Goods and Services
Boosted U.S. Farm Exports
Created Trade Surplus in Services
Reduced Oil and Grocery Prices
Stepped Up Foreign Direct Investment
9. First and foremost, is that NAFTA made it possible for many U.S.
manufacturers to move jobs to lower-cost Mexico. The
manufacturers that remained lowered wages to compete in those
industries.
The second disadvantage was that many of Mexico's farmers were
put out of business by U.S.-subsidized farm products. NAFTA
provisions for Mexican labor and environmental protection were
not strong enough to prevent those workers from being exploited.
U.S. Jobs Were Lost
U.S. Wages Were Suppressed
Mexico's Farmers Were Put Out of Business
Maquiladora Workers Were Exploited
Mexico's Environment Deteriorated
NAFTA Called for Free Access for Mexican Trucks
10. On January 1, 1994, the North American Free Trade
Agreement between the United States, Canada, and
Mexico (NAFTA) entered into force.
Trade between the United States and its NAFTA partners
has soared since the agreement entered into force.
U.S. goods and services trade with NAFTA totaled $1.6
trillion in 2009 (latest data available for goods and services
trade combined). Exports totaled $397 billion. Imports
totaled $438 billion. The U.S. goods and services trade
deficit with NAFTA was $41 billion in 2009.
11. The United States has $918 billion in total (two ways)
goods trade with NAFTA countries (Canada and
Mexico) during 2010. Goods exports totaled $412
billion; Goods imports totaled $506 billion. The U.S.
goods trade deficit with NAFTA was $95 billion in
2010.
Trade in services with NAFTA (exports and imports)
totaled $99 billion in 2009 (latest data available for
services trade). Services exports were $63.8 billion.
Services imports were $35.5 billion. The U.S. services
trade surplus with NAFTA was $28.3 billion in 2009.
12. The NAFTA countries (Canada and Mexico),
were the top two purchasers of U.S. exports in
2010. (Canada $248.2 billion and Mexico $163.3
billion).
U.S. goods exports to NAFTA in 2010 were
$411.5 billion, up 23.4% ($78 billion) from 2009,
and 149% from 1994 (the year prior to Uruguay
Round) and up 190% from 1993 (the year prior to
NAFTA). U.S. exports to NAFTA accounted for
32.2% of overall U.S. exports in 2010.
13. The top export categories (2-digit HS) in 2010
were: Machinery ($63.3 billion), Vehicles (parts) ($56.7
billion), Electrical Machinery ($56.2 billion), Mineral
Fuel and Oil ($26.7 billion), and Plastic ($22.6 billion).
U.S. exports of agricultural products to NAFTA
countries totaled $31.4 billion in 2010. Leading
categories include: red meats, fresh/chilled/frozen
($2.7 billion), coarse grains ($2.2 million), fresh fruit
($1.9 billion), snack foods (excluding nuts) ($1.8
billion), and fresh vegetables ($1.7 billion).
14. The NAFTA countries were the second and third
largest suppliers of goods imports to the United
States in 2010. (Canada $276.5 billon, and Mexico
$229.7 billion).
U.S. goods imports from NAFTA totaled $506.1 billion
in 2010, up 25.6% ($103 billion), from 2009, and up
184% from 1994, and up 235% from 1993. U.S.
imports from NAFTA accounted for 26.5% of overall
U.S. imports in 2010.
The five largest categories in 2010 were Mineral Fuel
and Oil (crude oil) ($116.2 billion), Vehicles ($86.3
billion), Electrical Machinery ($61.8 billion), Machinery
($51.2 billion), and Precious Stones (gold) ($13.9).
15. U.S. imports of agricultural products from NAFTA
countries totaled $29.8 billion in 2010. Leading
categories include: fresh vegetables ($4.6 billion),
snack foods, (including chocolate) ($4.0 billion), fresh
fruit (excluding bananas) ($2.4 billion), live animals
($2.0 billion), and red meats, fresh/chilled/frozen ($2.0
billion).
U.S. imports of private commercial services* (i.e.,
excluding military and government) were $35.5 billion
in 2009 (latest data available), down 11.2% ($4.5
billion) from 2008, but up 100% since 1994.
16. The U.S. goods trade deficit with NAFTA was
$94.6 billion in 2010, a 36.4% increase ($25
billion) over 2009. The U.S. goods trade
deficit with NAFTA accounted for 26.8% of
the overall U.S. goods trade deficit in 2010.
The United States had a services trade
surplus of $28.3 billion with NAFTA countries
in 2009.
17. U.S. foreign direct investment (FDI) in NAFTA Countries
(stock) was $357.7 billion in 2009 , up 8.8% from 2008.
U.S. direct investment in NAFTA Countries is in nonbank
holding companies, and in the manufacturing,
finance/insurance, and mining sectors.
NAFTA Countries FDI in the United States (stock) was $237.2
billion in 2009, up 16.5% from 2008.
NAFTA countries direct investment in the U.S. is in the
manufacturing, finance/insurance, and banking sectors