NORTH AMERICAN FREE

TRADE AGGREMENT
NAFTA
AN INTRODUCTION

• Secretariats - Mexico City, Ottawa and Washington, D.C.

• Official languages - English, French and Spanish
• Membership - Canada, Mexico, United States
• Establishment - Formation1 January 1994
• Area - Total21,783,850 km² (1st)
• Population - 2008 estimate445,335,091 (3rd) -
• GDP 2007 estimate - Total$15,857 billion (1st) -
• The North American Free Trade Agreement (NAFTA ) is a
trilateral trade bloc in North America created by the governments
of the United States, Canada, and Mexico.

• The agreements were signed in December 1993 by the leaders of

the three countries — Brian Mulroney of Canada, Carlos Salinas
de Gortari of Mexico, and Bill Clinton of the United States but
did not come into effect until January 1, 1994.

– In terms of combined purchasing power parity GDP of its members, as of

2007 the trade bloc is the largest in the world and second largest by
nominal GDP comparison.

– It also is one of the most powerful, wide-reaching treaties in the world.

 NAFTA SUPPLEMENTS
• The North American Free Trade Agreement (NAFTA) has two
supplements:-
the North American Agreement on Environmental
Cooperation (NAAEC) and the North American Agreement on
Labour Cooperation (NAALC)

• (NAAEC) was a response to environmentalists' concerns that

the United States would lower its standards if the three countries
did not achieve consistent environmental regulation.

• (NAALC) supplements NAFTA and endeavors to create a

foundation for cooperation among the three countries for the
resolution of labour problems, as well as to promote greater
cooperation among trade unions and social organizations in order
to fight for improved labor conditions.
• Trade and Investment Effects

• NAFTA is a broad agreement, but improved market access,

including tariff reductions on merchandise trade, was the major
U.S. goal.

• After ten years, most tariffs have gone to zero, except for some
very sensitive (mostly agricultural) goods that have limited
protection for up to 15 years. Clearly, U.S.-Mexico trade and
investment have grown sharply over the past decade.

• From 1994 to 2003, U.S. exports to Mexico rose 91%, compared

to 41% to the world. U.S. imports increased by 179%, compared
to 89% from the world.
 $800

$700

$600
BI LLI ON DOLLARS

411.8
$500

412.2
$400

$300

$200
300.9

226.9
$100

$0
NAFTA
EU(25) & J apan

EXPORTS I MPORTS
 U.S. – NAFTA TOTAL TRADE
1990-2004

800
713.0
700 657.1
612.3 627.0
602.1
561.9
BILLION DOLLARS

600
503.3
500 477.3
421.2
400 380.6
343.2
293.2
300 265.0
240.6
233.5
200

100

0
1990 1992 1994 1996 1998 2000 2002 2004
 EFFECTS OF NAFTA

BENEFITS

• Benefit’s the importers by reduced or duty free goods.

• No MPF from Canada for NAFTA goods

• Can make the exporter more competitive then other non-

participating countries

• 200% increase in trade among the 3 countries.

• Increase market access within each country.

 LIMITATIONS

• It has negative impacts on farmers in Mexico who saw food prices

fall based on cheap imports from U.S. agribusiness

• It has negative impacts on U.S. 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 U.S. and Mexico.

• Some economists believe that NAFTA has not been enough (or
worked fast enough) to produce an economic convergence, nor to
substantially reduce poverty rates
• NAFTA slightly increased growth in output and productivity –

The CBO study, which had a limited model for estimating the
trade effects on GDP, found that NAFTA increased annual GDP
growth in the United States by no more than .04%, and for
Mexico, no more than 0.8%.

• NAFTA had little or no impact on aggregate employment –

None of the reports attributed changes in aggregate U.S. or

Mexican employment levels to NAFTA
• Impact on Jobs

• The study's indicates that the reduction in net exports to Mexico has
eliminated 227,663 U.S. job opportunities since 1993, and the
reduction in net exports to Canada has eliminated 167,172 job
opportunities in the same period. In total, NAFTA resulted in a net
loss of 394,835 jobs in its first three years.

• The analysis finds that NAFTA has eliminated significant numbers

of jobs for women and members of minority groups, as well as
white males. Between 1993 and 1996, women lost 141,454 jobs to
NAFTA, blacks lost 36,890 jobs, and Hispanics lost 22,520 jobs,
numbers closely reflecting these groups' shares in manufacturing
industries
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 74,098 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
 PUBLIC OPINION

• Public opinion toward NAFTA in the United States, Canada, and

Mexico is mixed. A survey conducted by CIDE and COMEXI in
Mexico showed that 64 percent of the Mexican public favored
NAFTA.

• The Program on International Policy Attitudes reported in a poll

that 47 percent of Americans thought that NAFTA has been good
for the United States, while 39 percent thought it had been bad
for the country
 RECENT NAFTA NEWS

NAFTA Toll-Highway Destroying Prime Agricultural Land

• The Trans-Texas Corridor (TTC) is no ordinary highway. The toll

road would be four football fields wide. It includes separate lanes
(up to six for automobiles, four for large trucks), plus tracks for
freight trains, separate tracks for high-speed and commuter rail,
also space for oil and gas pipelines, electricity wires, and
broadband transmission cables.
The implications of this scheme are staggering. Some experts
say that up to a million people in Texas stand to lose their homes
and 584,000 acres of rich farm and ranchland are to be destroyed,
all for a privately funded highway.
 CONCLUSION

NAFTA is one of the most successful treaties of the times in

terms of growth in trade i.e. imports & exports , G.D.P e.t.c but
on the other hand it is also responsible for causalities like loss of
jobs, migration, rising level of inequality and many others.
Thus it is important that the treaty should be carried forward
concerning about taking steps for the problems originated due to
NAFTA ,otherwise it will create inequality in many terms which
can lead to bad conditions in future for all the three countries.
PRESENTED BY -
ANANT SAXENA
POONAM JAMWAL
HEENA DUA
POOJA VERMA
M.B.A 3rd Sem