1. UNIVERSITY OF MUMBAI
PROJECT ON
MARKETING STRATEGIES OF MTS
MASTER OF COMMERCE (BANKING AND FINANCE)
SUBJECT: MARKETING STRATEGIES
SEMESTER- I
2012-13
In Partial Fulfillment of the Requirement under Semester Based Credit and
Grading System for Post Graduates (PG)
Program under Faculty of Commerce
SUBMITTED BY:
KUNWAR ARIF KHAN
ROLL NO: 68
PROJECT GUIDE
(Mr. RAHUL CHOPRA)
K.P.B HINDUJA COLLEGE OF COMMERCE, 315 NEW CHARNI ROAD,
MUMBAI 400004.
2. CERTIFICATE
This is to certify that Mr. ARIF KHAN of M.Com. banking and finance Semester
st
I [ 2012-2013] has successfully completed the Project on ―NAFTA and APEC
economic integration‖ under the guidance of Dr. (Ms. Rajeshwary G.)
Project Guide
Course Coordinator
Internal Examiner
External Examiner
Principal
Date:
Place: Mumbai
3. DECLARATION
I Mr. ARIF KHAN the student of M.Com (Banking and finance) Ist Semester
(2012-2013), hereby declare that I have complete the project on Strategic
Managemt of NAFTA and APEC integration.
The Information submitted is true and original to the best of my knowledge.
ARIF KHAN
(Signature)
4. ACKNOWLEDGEMENT
I wish to express my sincere gratitude to Professor as well as our project guide Dr.
Mr. RAHUL CHOPRA of Hinduja College of Commerce, Charni Road,
Mumbai for providing me an opportunity to present a project on ‗Project On
Marketing Strategies Of Mts‘ This project has not only developed my skills as
academics are concerned but also to a further extent help to know the topic in a
much better way. I would also love to express my gratitude to our librarians who
co-operate in completion of my project.
5. INTRODUCTION
The North American Free Trade Agreement (NAFTA) is an agreement signed by the
governments of Canada, Mexico, and the United States, creating a trilateral trade bloc in North
America. The agreement came into force on January 1, 1994. It superseded the Canada – United
States Free Trade Agreement between the U.S. and Canada. In terms of combined GDP of its
members, as of 2010 the trade bloc is the largest in the world.
NAFTA has two supplements: the North American Agreement on Environmental
Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC).
Negotiation and U.S. ratification
Following diplomatic negotiations dating back to 1986 among the three nations, the leaders met
in San Antonio, Texas, on December 17, 1992, to sign NAFTA. U.S. President George H. W.
Bush, Canadian Prime Minister Brian Mulroney and Mexican President Carlos Salinas, each
responsible for spearheading and promoting the agreement, ceremonially signed it. The
agreement then needed to be ratified by each nation's legislative or parliamentary branch.
Before the negotiations were finalized, Bill Clinton came into office in the U.S. and Kim
Campbell in Canada, and before the agreement became law, Jean Chrétien had taken office in
Canada.
The proposed Canada-U.S.trade agreement had been very controversial and divisive in Canada,
and the 1988 Canadian election was fought almost exclusively on that issue. In that election,
more Canadians voted for anti-free trade parties (the Liberals and the New Democrats) but the
split caused more seats in parliament to be won by the pro-free tradeProgressive
Conservatives (PCs). Mulroney and the PCs had a parliamentary majority and were easily able to
pass the Canada-US FTA and NAFTA bills. However, Mulroney himself had become deeply
unpopular and resigned on June 25, 1993. He was replaced as Conservative leader and prime
minister by Kim Campbell. Campbell led the PC party into the1993 election where they were
decimated by the Liberal Party under Jean Chrétien, who had campaigned on a promise to
renegotiate or abrogate NAFTA; however, Chrétien subsequently negotiated two supplemental
agreements with the new US president. In the US, Bush, who had worked to "fast track" the
signing prior to the end of his term, ran out of time and had to pass the required ratification and
signing into law to incoming president Bill Clinton. Prior to sending it to the United States
Senate, Clinton introduced clauses to protect American workers and allay the concerns of many
House members. It also required US partners to adhere to environmental practices and
regulations similar to its own.
With much consideration and emotional discussion, the House of Representatives approved
NAFTA on November 17, 1993, 234-200. The agreement's supporters included 132 Republicans
6. and 102 Democrats. NAFTA passed the Senate 61-38. Senate supporters were 34 Republicans
and 27 Democrats. Clinton signed it into law on December 8, 1993; it went into effect on
January 1, 1994.[2][3] Clinton while signing the NAFTA bill stated that "NAFTA means jobs.
American jobs, and good-paying American jobs. If I didn't believe that, I wouldn't support this
agreement
The goal of NAFTA was to eliminate barriers to trade and investment between the US, Canada
and Mexico. The implementation of NAFTA on January 1, 1994 brought the immediate
elimination of tariffs on more than one-half of Mexico's exports to the U.S. and more than one-
third of U.S. exports to Mexico. Within 10 years of the implementation of the agreement, all US-
Mexico tariffs would be eliminated except for some U.S. agricultural exports to Mexico that
were to be phased out within 15 years. Most U.S.-Canada trade was already duty free. NAFTA
also seeks to eliminate non-tariff trade barriers and to protect the intellectual property right of the
products.
In the area of intellectual property, the North American Free Trade Agreement Implementation
Act made some changes to the Copyright law of the United States, foreshadowing the Uruguay
Round Agreements Act of 1994 by restoring copyright (within NAFTA) on certain motion
pictures which had entered the public domain.
Mechanisms
NAFTA's effects, both positive and negative, have been quantified by several economists, whose
findings have been reported in publications such as the World Bank's Lessons from NAFTA for
Latin America and the Caribbean, NAFTA's Impact on North America, and NAFTA
Revisited by the Institute for International Economics. Some argue that NAFTA has been
positive for Mexico, which has seen its poverty rates fall and real income rise (in the form of
lower prices, especially food), even after accounting for the 1994–95 economic crisis.[10] Others
argue that NAFTA has been beneficial to business owners and elites in all three countries, but
has had negative impacts on farmers in Mexico who saw food prices fall based on cheap imports
from US agribusiness, and negative impacts on US workers in manufacturing and assembly
industries who lost jobs. Critics also argue that NAFTA has contributed to the rising levels of
inequality in both the US and Mexico. Some economists believe that NAFTA has not been
enough (or worked fast enough) to produce an economic convergence,[11] nor to substantially
reduce poverty rates. Some have suggested that in order to fully benefit from the agreement,
Mexico must invest more in education and promote innovation in infrastructure and agriculture.
Trade
The agreement opened the door for open trade, ending tariffs on various goods and services, and
implementing equality between Canada, USA, and Mexico. NAFTA has allowed agricultural
goods such as eggs, corn, and meats to be tariff-free. This allowed corporations to trade freely
7. and import and export various goods on a North American scale. Since the implementation of
NAFTA, the countries involved have been able to do the following
Exports
At $248.2 billion for Canada and $163.3 billion for Mexico, they were the top two purchasers of
US exports in 2010.
US 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). US exports to NAFTA accounted for 32.2% of overall US exports in 2010.
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).
US exports of agricultural products to NAFTA countries totaled $31.4 billion in 2010. Leading
categories included red meats, fresh/chilled/frozen ($2.7 billion); coarse grains ($2.2 billion);
fresh foods (excluding nuts) ($1.8 billion); and fresh vegetables ($1.7 billion).
US exports of private commercial services, excluding military and government, to NAFTA were
$63.8 billion in 2009 (the latest data available), down 7% ($4.6 billion) from 2008, but up 125%
since 1994
Imports
At $276.4 billion for Canada and $229.7 billion for Mexico, they were the second and third
largest suppliers of goods imports to the United States in 2010.
US goods imports from NAFTA totaled $506.1 billion in 2010, up 25.6% ($103 billion), from
2009, up 184% from 1994, and up 235% from 1993. US 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 billion).
US 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).
US imports of private commercial services 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.
8. Trade balances
The US goods trade deficit with NAFTA was $94.6 billion in 2010, a 36.4% increase ($25
billion) over 2009.
The US goods trade deficit with NAFTA accounted for 26.8% of the overall U.S. goods trade
deficit in 2010.
The US had a services trade surplus of $28.3 billion with NAFTA countries in 2009.
Investment
The US foreign direct investment (FDI) in NAFTA Countries (stock) was $357.7 billion in 2009
(latest data available), up 8.8% from 2008.
The US direct investment in NAFTA countries is in nonbank holding companies, and in the
manufacturing, finance/insurance, and mining sectors.
The foreign direct investment, of Canada and Mexico in the United States (stock) was $237.2
billion in 2009.
Industry
Maquiladoras (Mexican factories that take in imported raw materials and produce goods for
export) have become the landmark of trade in Mexico. These are plants that moved to this region
from the United States, hence the debate over the loss of American jobs. Hufbauer's (2005) book
shows that income in the maquiladora sector has increased 15.5% since the implementation of
NAFTA in 1994. Other sectors now benefit from the free trade agreement, and the share
of exports from non-border states has increased in the last five years while the share of exports
from maquiladora-border states has decreased. This has allowed for the rapid growth of non-
border metropolitan areas, such as Toluca, León and Puebla; all three larger in population
than Tijuana, Ciudad Juárez, and Reynosa.
Environment
Securing U.S. congressional approval for NAFTA would have been impossible without
addressing public concerns about NAFTA‘s environmental impact. The Clinton administration
negotiated a side agreement on the environment with Canada and Mexico, the North American
Agreement on Environmental Cooperation (NAAEC), which led to the creation of
the Commission for Environmental Cooperation (CEC) in 1994. To alleviate concerns that
NAFTA, the first regional trade agreement between a developing country and two developed
9. countries, would have negative environmental impacts, the CEC was given a mandate to conduct
ongoing ex post environmental assessment of NAFTA.
In response to this mandate, the CEC created a framework for conducting environmental analysis
of NAFTA, one of the first ex post frameworks for the environmental assessment of trade
liberalization. The framework was designed to produce a focused and systematic body of
evidence with respect to the initial hypotheses about NAFTA and the environment, such as the
concern that NAFTA would create a "race to the bottom" in environmental regulation among the
three countries, or the hope that NAFTA would pressure governments to increase their
environmental protection mechanisms.The CEC has held four symposia using this framework to
evaluate the environmental impacts of NAFTA and has commissioned 47 papers on this subject.
In keeping with the CEC‘s overall strategy of transparency and public involvement, the CEC
commissioned these papers from leading independent experts.
Overall, none of the initial hypotheses were confirmed. NAFTA did not inherently present a systemic
threat to the North American environment, as was originally feared, apart from potentially
the ISDS provisions of Ch 11. NAFTA-related environmental threats instead occurred in specific areas
where government environmental policy, infrastructure, or mechanisms, were unprepared for the
increasing scale of production under trade liberalization. In some cases, environmental policy was
neglected in the wake of trade liberalization; in other cases, NAFTA's measures for investment protection,
such as and measures against non-tariff trade barriers, threatened to discourage more vigorous
environmental policy. The most serious overall increases in pollution due to NAFTA were found in the
base metals sector, the Mexican petroleum sector, and the transportation equipment sector in the United
States and Mexico, but not in Canada.
Agriculture
From the earliest negotiation, agriculture was (and still remains) a controversial topic within
NAFTA, as it has been with almost all free trade agreements that have been signed within
the WTO framework. Agriculture is the only section that was not negotiated trilaterally; instead,
three separate agreements were signed between each pair of parties. The Canada–U.S. agreement
contains significant restrictions and tariff quotas on agricultural products (mainly sugar, dairy,
and poultry products), whereas the Mexico–U.S. pact allows for a wider liberalization within a
framework of phase-out periods.
The overall effect of the Mexico–U.S. agricultural agreement is a matter of dispute. Mexico did
not invest in the infrastructure necessary for competition, such as efficient railroads and
highways, creating more difficult living conditions for the country's poor. Still, the causes of
rural poverty can be directly attributed to NAFTA in fact, Mexico's agricultural exports increased
9.4 percent annually between 1994 and 2001, while imports increased by only 6.9 percent a year
during the same period.
One of the most affected agricultural sectors is the meat industry. Mexico has gone from a small-
key player in the pre-1994 U.S. export market to the 2nd largest importer of U.S. agricultural
products in 2004, and NAFTA may be credited as a major catalyst for this change. The
allowance of free trade removed the hurdles that impeded business between the two countries.
As a result, Mexican farmers have provided a growing meat market for the U.S., leading to an
increase in sales and profits for the U.S. meat industry. This coincides with a noticeable increase
10. in Mexican per capita GDP that has created large changes in meat consumption patterns,
implying that Mexicans can now afford to buy more meat and thus per capita meat consumption
has grown.
Production of corn in Mexico has increased since NAFTA's implementation. However, internal
corn demand has increased beyond Mexico's sufficiency, and imports have become necessary,
far beyond the quotas Mexico had originally negotiated. Zahniser & Coyle have also pointed out
that corn prices in Mexico, adjusted for international prices, have drastically decreased, yet
through a program of subsidies expanded by former president Vicente Fox, production has
remained stable since 2000.
The logical result of a lower commodity price is that more use of it is made downstream.
Unfortunately, many of the same rural people who would have been likely to produce higher-
margin value-added products in Mexico have instead emigrated. The rise in corn prices due to
increased ethanol demand may improve the situation of corn farmers in Mexico.
In a study published in the August 2008 issue of the American Journal of Agricultural
Economics, NAFTA has increased U.S. agricultural exports to Mexico and Canada even though
most of this increase occurred a decade after its ratification. The study focused on the effects that
gradual "phase-in" periods in regional trade agreements, including NAFTA, have on trade flows.
Most of the increase in members‘ agricultural trade, which was only recently brought under the
purview of the World Trade Organization, was due to very high trade barriers before NAFTA or
other regional trade agreements.
Mobility of persons
According to the Department of Homeland Security Yearbook of Immigration Statistics, during
fiscal year 2006 (i.e., October 2005 through September 2006), 73,880 foreign professionals
(64,633 Canadians and 9,247 Mexicans) were admitted into the United States for temporary
employment under NAFTA (i.e., in the TN status). Additionally, 17,321 of their family members
(13,136 Canadians, 2,904 Mexicans, as well as a number of third-country nationals married to
Canadians and Mexicans) entered the U.S. in the treaty national's dependent (TD)
status.[22] Because DHS counts the number of the new I-94 arrival records filled at the border,
and the TN-1 admission is valid for three years, the number of non-immigrants in TN status
present in the U.S. at the end of the fiscal year is approximately equal to the number of
admissions during the year. (A discrepancy may be caused by some TN entrants leaving the
country or changing status before their three-year admission period has expired, while other
immigrants admitted earlier may change their statusto TN or TD, or extend TN status granted
earlier).
Canadian authorities estimated that, as of December 1, 2006, a total of 24,830 U.S. citizens and
15,219 Mexican citizens were present in Canada as "foreign workers". These numbers include
both entrants under the NAFTA agreement and those who have entered under other provisions of
the Canadian immigration law.[ New entries of foreign workers in 2006 were 16,841 (U.S.
citizens) and 13,933 (Mexicans)
Criticism and controversies
11. Canadian disputes
Garment workers assemble suits in a Toronto factory in 1901
There is much concern in Canada over the provision that if something is sold even once as
acommodity, the government cannot stop its sale in the future.[25] This applies to the water from
Canada's lakes and rivers, fueling fears over the possible destruction of Canadianecosystems and
water supply.
In 1999, Sun Belt Water Inc., a company out of Santa Barbara, California, filed an Arbitration
Claim under Chapter 11 of the NAFTA claiming $105 million as a result of Canada's prohibition
on the export of bulk water by marine tanker, a move that destroyed the Sun Belt business
venture. The claim sent shock waves through Canadian governments that scrambled to update
water legislation and remains unresolved.
Other fears come from the effects NAFTA has had on Canadian lawmaking. In 1996, the
gasoline additive MMT was brought into Canada by an American company. At the time, the
Canadian federal government banned the importation of the additive. The American company
brought a claim under NAFTA Chapter 11 seeking US$201 million,[26] from the Canadian
government and the Canadian provinces under the Agreement on Internal Trade ("AIT"). The
American company argued that their additive had not been conclusively linked to any health
dangers, and that the prohibition was damaging to their company. Following a finding that the
ban was a violation of the AIT,[27]the Canadian federal government repealed the ban and settled
with the American company for US$13 million.[28] Studies by Health and Welfare Canada (now
Health Canada) on the health effects of MMT in fuel found no significant health effects
associated with exposure to these exhaust emissions. Other Canadian researchers and the U.S.
Environmental Protection Agency disagree with Health Canada, and cite studies that include
possible nerve damage.
Ponderosa Pine logs taken from Malheur National Forest, Grant County, Oregon.
The United States and Canada had been arguing for years over the United States' decision to
impose a 27 percent duty on Canadian softwood lumber imports, until new Canadian Prime
Minister Stephen Harper compromised with the United States and reached a settlement on July 1,
12. 2006. The settlement has not yet been ratified by either country, in part due to domestic
opposition in Canada.
Canada had filed numerous motions to have the duty eliminated and the collected duties returned
to Canada.[31] After the United States lost an appeal from a NAFTA panel, it responded by saying
"We are, of course, disappointed with the [NAFTA panel's] decision, but it will have no impact
on the anti-dumping and countervailing duty orders." (Nick Lifton, spokesman for U.S. Trade
Representative Rob Portman) On July 21, 2006, the United States Court of International
Trade found that imposition of the duties was contrary to U.S. law.[33][34]
Change in income trust taxation
On October 30, 2007, American citizens Marvin and Elaine Gottlieb filed a Notice of Intent to
Submit a Claim to Arbitration under NAFTA. The couple claims thousands of U.S. investors lost
a total of $5 billion dollars in the fall-out from the Conservative Government'sdecision the
previous year to change the tax rate on income trusts in the energy sector. On April 29, 2009, a
determination was made that this change in tax law was not expropriation.[35]
Further criticism in Canada
A book written by Mel Hurtig published in 2002 called The Vanishing Country charged that
since NAFTA's ratification more than 10,000 Canadian companies had been taken over by
foreigners, and that 98% of all foreign direct investments in Canada were for foreign
takeovers.[36]
OBJECTIVES OF NAFTA AUDITS (VERIFICATIONS)
This chapter explains the overall objective for conducting a North American Free Trade
Agreement (NAFTA) exporter and/or producer verification. The specific verification program
bjectives are also provided.
1 Verification Objective
The overall objective of the exporter and/or producer verification is to confirm that the
product(s) certified by the exporter and/or producer qualify as originating in accordance with
Chapter 4 of the NAFTA and the NAFTA Rules of Origin Regulations (the Regulations).
4.2 Objectives of the Verification Programs
Verification programs should be developed based on the verification objective stated in Section
4.1, the information gathered, and the concerns identified during the planning and preparation
phase of the audit. Listed below are the specific verification program objectives subject to the
verification process. Chapter 5 contains the verification programs and sub-programs which
identify the recommended verification procedures to be utilized in meeting these objectives.
13. OBJECTIVES OF THE VERIFICATION PROGRAMS
A. NON-QUALIFYING OPERATIONS PROGRAM
To ensure that the good does not qualify as originating because of mere dilution with water or
another substance or because of a production or pricing practice designed to circumvent the
Rules of Origin as set out in Chapter 4 of the NAFTA.
B. TARIFF CLASSIFICATION PROGRAM
To ensure that all non-originating materials are sufficiently transformed in the NAFTA territory
so as to undergo the necessary tariff classification change as required by the Specific Rule of
Origin applicable to the exported good and to ensure that the finished good and the non-
originating materials used to produce it are properly classified.
REGIONAL VALUE CONTENT REQUIREMENT
C. TRANSACTION VALUE METHOD - (RVC) - PROGRAM
To ensure that the Regional Value Content requirement, as required by the rules of origin, has
been met where the Transaction Value Method has been used.
D. NET COST METHOD - (RVC) - PROGRAM
To ensure that the Regional Value Content requirement, as required by the rules of origin, has
been met where the Net Cost Method has been used.
E. TRANSSHIPMENT PROGRAM
To verify that the originating good, by reason of having undergone production that satisfies the
requirements of Article 401 of the NAFTA, (1) Is not withdrawn from Customs control outside
the territories of the NAFTA countries and (2) Does not undergo further production or any other
operation outside the territories of the NAFTA countries, other than unloading, reloading, or any
other operation necessary to preserve it in good condition, such as inspection, removal of dust
that accumulates during shipment, ventilation, spreading out or drying, chilling, replacing salt,
sulphur dioxide or other aqueous solutions, replacing damaged packing materials and containers
and removal of units of the good that are spoiled or damaged and present a danger to the
remaining units of the good, or to transport the good to the territory of a NAFTA country.
For additional verification programs from the other Parties, refer to the respective Annex,
Section 4.2 at the end of this Chapter.
14. ARTICLES UNDER NAFTA.
Article 101: Establishment of the Free Trade Area
The Parties to this Agreement, consistent with Article XXIV of the General Agreement on Tariffs and Trade, hereby establish a
free trade area.
Article 102: Objectives
1. The objectives of this Agreement, as elaborated more specifically through its principles
and rules, including national treatment, most-favored-nation treatment and transparency,
are to:
a) eliminate barriers to trade in, and facilitate the cross-border movement of,
goods and services between the territories of the Parties;
b) promote conditions of fair competition in the free trade area;
c) increase substantially investment opportunities in the territories of the Parties;
d) provide adequate and effective protection and enforcement of intellectual
property rights in each Party's territory;
e) create effective procedures for the implementation and application of this
Agreement, for its joint administration and for the resolution of disputes; and
f) establish a framework for further trilateral, regional and multilateral
cooperation to expand and enhance the benefits of this Agreement.
2. The Parties shall interpret and apply the provisions of this Agreement in the light of its
objectives set out in paragraph 1 and in accordance with applicable rules of international
law.
Article 103: Relation to Other Agreements
1. The Parties affirm their existing rights and obligations with respect to each other under
the General Agreement on Tariffs and Trade and other agreements to which such Parties
are party.
2. In the event of any inconsistency between this Agreement and such other agreements,
this Agreement shall prevail to the extent of the inconsistency, except as otherwise
provided in this Agreement.
15. Article 104: Relation to Environmental and Conservation Agreements
1. In the event of any inconsistency between this Agreement and the specific trade
obligations set out in:
a) the Convention on International Trade in Endangered Species of Wild Fauna
and Flora, done at Washington, March 3, 1973, as amended June 22, 1979,
b) the Montreal Protocol on Substances that Deplete the Ozone Layer, done at
Montreal, September 16, 1987, as amended June 29, 1990,
c) the Basel Convention on the Control of Transboundary Movements of
Hazardous Wastes and Their Disposal, done at Basel, March 22, 1989, on its
entry into force for Canada, Mexico and the United States, or
d) the agreements set out in Annex 104.1,
such obligations shall prevail to the extent of the inconsistency, provided that where a
Party has a choice among equally effective and reasonably available means of complying
with such obligations, the Party chooses the alternative that is the least inconsistent with
the other provisions of this Agreement.
2. The Parties may agree in writing to modify Annex 104.1 to include any amendment to
an agreement referred to in paragraph 1, and any other environmental or conservation
agreement.
Article 105: Extent of Obligations
The Parties shall ensure that all necessary measures are taken in order to give effect to the
provisions of this Agreement, including their observance, except as otherwise provided in this
Agreement, by state and provincial governments.
Annex 104.1: Bilateral and Other Environmental and Conservation
Agreements
1. The Agreement Between the Government of Canada and the Government of the United
States of America Concerning the Transboundary Movement of Hazardous Waste, signed
at Ottawa, October 28, 1986.
2. The Agreement Between the United States of America and the United Mexican States
on Cooperation for the Protection and Improvement of the Environment in the Border
Area, signed at La Paz, Baja California Sur, August 14, 1983.
16. APEC
Asia-Pacific Economic Cooperation (APEC) is a forum for 21 Pacific Rim countries (formally
Member Economies) that seeks to promote free trade and economic cooperation throughout
the Asia-Pacific region. Established in 1989 in response to the growing interdependence of Asia-
Pacific economies and the advent of regional trade blocs in other parts of the world, initially,
with the notion to the likely dominance of the sphere of economic influences of the highly
industrialized Japan (a member of G8) in the Asia-Pacific region and for the economic interests
of Australian agricultural/raw materialproducts to search for new buyers other than the demand-
declining European market [1], APEC works gradually (to include members of Newly
industrialized country at the time, although the agenda of free trade was a sensitive issue for the
developing NIEs, and forASEAN economies to explore new export market opportunities of
the natural resourcessuch as natural gas and seek regional economic integration (industrial
integration) by means of foreign direct investment on the behalf of ASEAN) to raise living
standards and education levels through sustainable economic growth and to foster a sense of
community and an appreciation of shared interests among Asia-Pacific countries. Members
account for approximately 40% of the world's population, approximately 54% of the
world's gross domestic product and about 44% of world trade.[2] For APEC Economic Trends
Analysis in 2012, see [3].
An annual APEC Economic Leaders' Meeting is attended by the heads of government of all
APEC members except Republic of China (represented under the name Chinese Taipei) by
a ministerial-level official. The location of the meeting rotates annually among the member
economies, and until 2011, a famous tradition involved the attending leaders dressing in
a national costume of the host member.
17. HISTORY
ABC news report of the first APEC meeting in Canberra, November 1990. Featuring delegates
watching the Melbourne Cup.
In January 1989, Australian Prime Minister Bob Hawke called for more effective economic
cooperation across the Pacific Rim region. This led to the first meeting of APEC in
theAustralian capital of Canberra in November, chaired by Australian Foreign Affairs
MinisterGareth Evans. Attended by political ministers from twelve countries, the meeting
concluded with commitments for future annual meetings in Singapore and South Korea.
Countries of the Association of Southeast Asian Nations (ASEAN) opposed the initial proposal,
instead proposing the East Asia Economic Caucus which would exclude non-Asian countries
such as the United States, Canada, Australia, and New Zealand. This plan was opposed and
strongly criticized by Japan and the United States.
The first APEC Economic Leaders' Meeting occurred in 1993 when U.S. President Bill Clinton,
after discussions with Australian Prime Minister Paul Keating, invited the heads of
government from member economies to a summit on Blake Island. He believed it would help
bring the stalled Uruguay Round of trade talks back on track. At the meeting, some leaders called
for continued reduction of barriers to trade and investment, envisioning a community in the Asia-
Pacific region that might promote prosperity through cooperation. The APEC Secretariat, based
in Singapore, was established to coordinate the activities of the organization.
During the meeting in 1994 in Bogor, Indonesia, APEC leaders adopted the Bogor Goals that
aim for free and open trade and investment in the Asia-Pacific by 2010 for industrialized
economies and by 2020 for developing economies. In 1995, APEC established a business
advisory body named the APEC Business Advisory Council (ABAC), composed of three
business executives from each member economy.
ABC news report of the first APEC meeting in Canberra, November 1990. Featuring delegates
watching the Melbourne Cup.
In January 1989, Australian Prime Minister Bob Hawke called for more effective economic
cooperation across the Pacific Rim region. This led to the first meeting of APEC in
theAustralian capital of Canberra in November, chaired by Australian Foreign Affairs
MinisterGareth Evans. Attended by political ministers from twelve countries, the meeting
concluded with commitments for future annual meetings in Singapore and South Korea.
Countries of the Association of Southeast Asian Nations (ASEAN) opposed the initial proposal,
instead proposing the East Asia Economic Caucus which would exclude non-Asian countries
such as the United States, Canada, Australia, and New Zealand. This plan was opposed and
strongly criticized by Japan and the United States.
18. The first APEC Economic Leaders' Meeting occurred in 1993 when U.S. President Bill Clinton,
after discussions with Australian Prime Minister Paul Keating, invited the heads of
government from member economies to a summit on Blake Island. He believed it would help
bring the stalled Uruguay Round of trade talks back on track. At the meeting, some leaders called
for continued reduction of barriers to trade and investment, envisioning a community in the Asia-
Pacific region that might promote prosperity through cooperation. The APEC Secretariat, based
in Singapore, was established to coordinate the activities of the organization.
During the meeting in 1994 in Bogor, Indonesia, APEC leaders adopted the Bogor Goals that aim for free
and open trade and investment in the Asia-Pacific by 2010 for industrialized economies and by 2020 for
developing economies. In 1995, APEC established a business advisory body named the APEC Business
Advisory Council (ABAC), composed of three business executives from each member economy.
ABC news report of the first APEC meeting in Canberra, November 1990. Featuring delegates
watching the Melbourne Cup.
In January 1989, Australian Prime Minister Bob Hawke called for more effective economic
cooperation across the Pacific Rim region. This led to the first meeting of APEC in
theAustralian capital of Canberra in November, chaired by Australian Foreign Affairs
MinisterGareth Evans. Attended by political ministers from twelve countries, the meeting
concluded with commitments for future annual meetings in Singapore and South Korea.
Countries of the Association of Southeast Asian Nations (ASEAN) opposed the initial proposal,
instead proposing the East Asia Economic Caucus which would exclude non-Asian countries
such as the United States, Canada, Australia, and New Zealand. This plan was opposed and
strongly criticized by Japan and the United States.
The first APEC Economic Leaders' Meeting occurred in 1993 when U.S. President Bill Clinton,
after discussions with Australian Prime Minister Paul Keating, invited the heads of
government from member economies to a summit on Blake Island. He believed it would help
bring the stalled Uruguay Round of trade talks back on track. At the meeting, some leaders called
for continued reduction of barriers to trade and investment, envisioning a community in the Asia-
Pacific region that might promote prosperity through cooperation. The APEC Secretariat, based
in Singapore, was established to coordinate the activities of the organization.
During the meeting in 1994 in Bogor, Indonesia, APEC leaders adopted the Bogor Goals that aim for free
and open trade and investment in the Asia-Pacific by 2010 for industrialized economies and by 2020 for
developing economies. In 1995, APEC established a business advisory body named the APEC Business
Advisory Council (ABAC), composed of three business executives from each member economy.
19. APEC's Three Pillars
To meet the Bogor Goals, APEC carries out work in three main areas:
1. Trade and Investment Liberalisation
2. Business Facilitation
3. Economic and Technical Cooperation
[edit]APEC and Trade Liberalisation
According to the organization itself, when APEC was established in 1989 average
trade barriers in the region stood at 16.9 percent, but had been reduced to 5.5% in
2004.[15]
[edit]APEC's Business Facilitation Efforts
APEC has long been at the forefront of reform efforts in the area of business
facilitation. Between 2002 and 2006 the costs of business transactions across the
region was reduced by 6%, thanks to the APEC Trade Facilitation Action Plan
(TFAPI). Between 2007 and 2010, APEC hopes to achieve an additional 5%
reduction in business transaction costs. To this end, a new Trade Facilitation Action
Plan has been endorsed. According to a 2008 research brief published by the World
Bank as part of its Trade Costs and Facilitation Project, increasing transparency in
the region's trading system is critical if APEC is to meet its Bogor Goal
targets.[16] The APEC Business Travel Card, a travel document for visa-free business
travel within the region is one of the concrete measures to facilitate business. In
May 2010 Russia joined the scheme, thus completing the circle.[17]
[edit]Proposed Free Trade Area of the Asia-Pacific
APEC is considering the prospects and options for a Free Trade Area of the Asia-
Pacific (FTAAP), which would include all APEC member economies. Since 2006,
the APEC Business Advisory Council, promoting the theory that a free trade area has
the best chance of converging the member nations and ensuring stable economic
growth under free trade, has lobbied for the creation of a high-level task force to
study and develop a plan for a free trade area. The proposal for a FTAAP arose due
to the lack of progress in theDoha round of World Trade Organization negotiations,
and as a way to overcome the "spaghetti bowl" effect created by overlapping and
conflicting elements of the umpteen free trade agreements—there are approximately
60 free trade agreements, with an additional 117 in the process of negotiation
in Southeast Asia and the Asia-Pacific region.[18][18][19][20][20] The FTAAP is more
ambitious in scope than the Doha round, which limits itself to reducing trade
restrictions. The FTAAP would create a free trade zone that would considerably
expand commerce and economic growth in the region.[18][20] The economic
expansion and growth in trade could exceed the expectations of other regional free
trade areas such as the ASEAN Plus Three (ASEAN + China, Japan, and South
Korea).[21] Some criticisms include that the diversion of trade within APEC members
would create trade imbalances, market conflicts and complications with nations of
other regions.[20] The development of the FTAAP is expected to take many years,
20. involving essential studies, evaluations and negotiations between member
economies.[18] It is also affected by the absence of political will and popular
agitations and lobbying against free trade in domestic politics.[18] [6]
APEC Study Center Consortium
In 1993, APEC Leaders decided to establish a network of APEC Study Centres
among universities and research institutions in member economies.[22]
Notable centers include:
Australian APEC Study Centre, Royal Melbourne Institute of
Technology, Australia
Berkeley APEC Study Center, University of California, Berkeley, United States
Chinese Taipei APEC Study Center, Taiwan Institute of Economic
Research, Taiwan
HKU APEC Study Center, Hong Kong University, Hong Kong, China
Kobe APEC Study Center, Kobe University, Japan
Nankai APEC Study Center, Nankai University, China
Philippine APEC Study Center Network, Philippine Institute for Development
Studies, Philippines
The Canadian APEC Study Centre, The Asia Pacific Foundation of
Canada, Vancouver, Canada
Indonesian APEC Study Centre, APEC Study Center University of
Indonesia, Indonesia.
APEC Business Advisory Council
The APEC Business Advisory Council (ABAC) was created by the APEC Economic
Leaders in November 1995 with the aim of providing advice to the APEC Economic
Leaders on ways to achieve the Bogor Goals and other specific business sector
priorities, and to provide the business perspective on specific areas of cooperation.
Each economy nominates up to three members from the private sector to ABAC.
These business leaders represent a wide range of industry sectors. ABAC provides an
annual report to APEC Economic Leaders containing recommendations to improve
the business and investment environment in the Asia-Pacific region, and outlining
business views about priority regional issues. ABAC is also the only non-
governmental organisation that is on the official agenda of the APEC Economic
Leader‘s Meeting.
Annual APEC Economic Leaders' Meetings
Since its formation in 1989, APEC has held annual meetings with representatives
from all member economies. The first four annual meetings were attended by
ministerial-level officials. Beginning in 1993, the annual meetings are named APEC
Economic Leaders' Meetings and are attended by the heads of government from all
21. member economies except Taiwan, which is represented by a ministerial-level
official. The annual Leaders' Meetings are not called summits.
Meeting developments
In 1997, the APEC meeting was held in Vancouver. Controversy arose after officers
of the Royal Canadian Mounted Police used pepper spray against protesters. The
protesters objected to the presence of autocratic leaders such as Indonesian
presidentSuharto.[31][32][33][34][35][36]
At the 2001 Leaders' Meeting in Shanghai, APEC leaders pushed for a new round of
trade negotiations and support for a program of trade capacity-building assistance,
leading to the launch of the Doha Development Agenda a few weeks later. The
meeting also endorsed the Shanghai Accord proposed by the United States,
emphasising the implementation of open markets, structural reform, andcapacity
building. As part of the accord, the meeting committed to develop and implement
APEC transparency standards, reduce tradetransaction costs in the Asia-Pacific
region by 5 percent over 5 years, and pursue trade liberalization policies relating to
information technology goods and services.
In 2003, Jemaah Islamiah leader Riduan Isamuddin had planned to attack the APEC
Leaders Meeting to be held in Bangkok in October. He was captured in the city
of Ayutthaya, Thailand by Thai police on August 11, 2003, before he could finish
planning the attack.[citation needed] Chile became the first South American nation to host
the Leaders' Meeting in 2004. The agenda of that year was focused on terrorism and
commerce, small and medium enterprise development, and contemplation of free
trade agreements and regional trade agreements.
The 2005 Leaders' Meeting was held in Busan, South Korea. The meeting focused on
the Doha round of World Trade Organization(WTO) negotiations, leading up to
the WTO Ministerial Conference of 2005 held in Hong Kong in December. Weeks
earlier, trade negotiations in Paris were held between several WTO members,
including the United States and the European Union, centered on reducing
agricultural trade barriers. APEC leaders at the summit urged the European Union to
agree to reducing farm subsidies. Peaceful protests against APEC were staged in
Busan, but the meeting schedule was not affected.
At the Leaders' Meeting held on November 19, 2006 in Hanoi, APEC leaders called
for a new start to global free-trade negotiations while condemning terrorism and
other threats to security. APEC also criticised North Korea for conducting a nuclear
test and a missile test launch that year, urging the country to take "concrete and
effective" steps toward nuclear disarmament. Concerns about nuclear proliferation in
the region was discussed in addition to economic topics. The United
States and Russia signed an agreement as part of Russia's bid to join the World Trade
Organization.
The APEC Australia 2007 Leaders' Meeting was held in Sydney from 2–9
September 2007. The political leaders agreed to an "aspirational goal" of a 25%
reduction of energy intensity correlative with economic development. Extreme
22. security measures including airborne sharpshooters and extensive steel-and-concrete
barricades were deployed against anticipated protesters and potential terrorists.
However, protest activities were peaceful and the security envelope was penetrated
with ease by a spoof diplomatic motorcade manned by members of the Australian
television program The Chaser, one of whom was dressed to resemble the Al-
Qaedaleader Osama bin Laden.
The APEC USA 2011 Leaders' Meeting was held on Honolulu, Hawaii 8–13
November 2011.[38]
APEC Leaders' Family Photo
At the end of the APEC Economic Leaders' Meeting, the leaders in attendance gather
for what is officially known as the APEC Leaders' Family Photo. A long-standing
tradition for this photo involved the attending leaders dressing in a costume that
reflects the culture of the host member. The tradition dates back to the first such
meeting in 1993 when then-U.S. President Bill Clinton outfitted the leaders in
leather bombardier jackets. However, at the 2010 meeting, Japan opted to have the
leaders dress in smart casual rather than the traditional kimono.[39] Similarly, when
Honolulu was selected in 2009 as the site for the 2011 APEC meeting,
U.S. President Barack Obama joked that he looked forward to seeing the leaders
dressed in "flowered shirts and grass skirts". However, after viewing previous
photos, and concerned that having the leaders dress in aloha shirts might give the
wrong impression during a period of economic austerity, Obama decided that it
might be time to end the tradition. Leaders were given a specially designed aloha
shirt as a gift but were not required to wear it for the photo
23. CRITICISM
Criticism
APEC has been criticized for failing to clearly define itself or serve a useful purpose. According
to the organization, it is "the premier forum for facilitating economic growth, cooperation, trade
and investment in the Asia-Pacific region" established to "further enhance economic growth and
prosperity for the region and to strengthen the Asia-Pacific community".[47] However, whether it
has accomplished anything constructive remains debatable, especially from the viewpoints of
European countries that cannot take part in APEC.