BY:-Ashik Tp

Srikant AhirNiyati MehtaPooja Solanki Bhavini Tandel

Siddharth Thorat

North American

FreeTrade

Agreement

Highlights• NAFTA –Introduction• Formation• Objectives• Members of NAFTA• Pros • Cons• Conclusion

North American Free Trade Agreement• It is an agreement signed by Canada, Mexico, and the United

States, creating a trilateral rules-based trade bloc in North America. 

• NAFTA is a trilateral free-trade deal that came into force in January 1994.

• Signed by U.S. president Bill Clinton, Mexican president Carlos Salinas, and Canadian prime minister Jean Chrétien.

• Purpose: encourage economic activity between the U.S., Mexico, Canada

• Headquarters: Ottawa (Canada), Mexico City (Mexico), and Washington D.C(U.S)

WHY NAFTA WAS

FORMATION??• It was made to make trade less

restrictive.• It eliminated most tariffs on

North American exports.• Reduced trading costs and

increased business investments.• Also helps North America to be

more competitive in the global market place.

OBJECTIVES OF NAFTATo eliminate trade barriers & facilitate the cross-border movements of goods and

services between the partiesTo promote conditions of fair competition

To substantially increase investment opportunities

To provide adequate and effective protection & enforcement of intellectual property rights in each territory

To create effective procedures for the implementation and application of this agreement ,for its joint administration & for resolution of disputes

To establish a framework for further trilateral, regional and multilateral co-operation to expand and enhance benefits of this agreement

NAFTAUnited States

Canada

Mexico

Members of NAFTA

Canada

• The 1989 US-Canada Free Trade Agreement (FTA) and the 1994 North American Free Trade Agreement (NAFTA) (which includes Mexico) touched off a dramatic increase in trade and economic integration with the US, its principal trading partner.

• Canada enjoys a substantial trade surplus with the US, which absorbs about three-fourths of Canadian merchandise exports each year.

• Canada is the US's largest foreign supplier of energy, including oil, gas, and electric power, and a top source of US uranium imports

CANADA’s Export and Import EXPORT :• Commodities: motor vehicles and parts, industrial machinery, aircraft,

telecommunications equipment; chemicals, plastics, fertilizers; wood pulp, timber, crude petroleum, natural gas, electricity, aluminum

• partner: US IMPORT :• Commodities: machinery and equipment, motor vehicles and parts, crude oil,

chemicals, electricity, durable consumer goods• partners: US , China , Mexico

•  The largest and most diversified economy in the world.• The United States is a market economy whose businesses are world

leaders in the manufacturing and high-tech sectors, especially computers, medical equipment, and aerospace, and in services, including financial services and telecommunications, and in agriculture.

The United States

USA’s export and import EXPORT :Commodities: agricultural products (soybeans, fruit, corn) ,industrial supplies (organic chemicals) , capital goods (transistors, aircraft, motor vehicle parts, computers, telecommunications equipment) , consumer goods (automobiles, medicines) partner: Canada 19.2%, Mexico 14.8%, China 7.6%, Japan

IMPORT :Commodities: industrial supplies ,crude oil ,computers, telecommunications equipment, motor vehicle parts, office machines, electric power machinery ,automobiles, clothing, medicines, furniture, toys partners:China 19.9%, Canada 14.8%, Mexico 12.5%, Japan 5.7%, Germany 5.3

Mexico• Mexico's $2.2 trillion economy has become increasingly oriented toward manufacturing in the

22 years since the North American Free Trade Agreement (NAFTA) entered into force. • Per capita income is roughly one-third that of the US; income distribution remains highly

unequal• Mexico has become the United States' second-largest export market and third-largest source

of imports. • In 2014, two-way trade in goods and services exceeded $590 billion. • Mexico has free trade agreements with 46 countries, putting more than 90% of trade under

free trade agreements. • In 2012, Mexico formally joined the Trans-Pacific Partnership negotiations and formed the

Pacific Alliance with Peru, Colombia and Chile.

MEXICO’s Exports And Imports EXPORT :• Commodities: manufactured goods, oil and oil products, silver, fruits,

vegetables, coffee, cotton• partner: US 80.2% IMPORT :• Commodities: metalworking machines, steel mill products, agricultural

machinery, electrical equipment, automobile parts for assembly and repair, aircraft, aircraft parts

• partners:US 48.8%, China 16.6%, Japan 4.4%

NAFTA agreement• The North American Free Trade Agreement (NAFTA) is a comprehensive agreement that sets the rules for

international trade and investment between Canada, the United States, and Mexico. The Agreement is a complex and lengthy document that includes eight sections, 22 chapters, and some 2,000 pages. Some of the most important provisions are highlighted below.

Market Access for Goods• The elimination of duties on thousands of goods crossing borders within North America.• Phased-in tariff reductions – now complete – and special rules for agricultural, automotive, and textile and

apparel products.• Important rights for NAFTA services providers and users across a broad spectrum of sectors.• Special commitments regarding telecommunications and financial services.• Formal dispute resolution processes that help resolve differences that arise in the interpretation or application of

NAFTA’s rules.Protection for Foreign Investment• Commitment to treat each others’ investors and their investments in the territory of the host NAFTA country no

less favorably than their own domestic investors.• Commitment to provide NAFTA investors with the best treatment given to foreign investors from beyond North

America.• A transparent and binding dispute resolution mechanism specially designed to deal with investment.

Protection for Intellectual Property• Adequate and effective protection and enforcement of a broad range of intellectual

property rights (including through patents, trademarks, copyrights, and industrial designs), while ensuring that the measures that enforce these rights do not themselves become barriers to legitimate trade.

Easier Access for Business Travelers• Easier access for business professionals in hundreds of different professions so that they

can travel for business throughout the continent.Access to Government Procurement• Access to government procurement opportunities at the federal levels in Canada,

Mexico, and the United States.Rules of Origin• NAFTA rules of origin are used to determine whether a good is eligible for preferential

treatment under NAFTA.• At various times since NAFTA came into effect, the partners have implemented measures

to liberalize or expand the list of products that qualify for preferential treatment.

PROS• Benefit’s the importers by reduced or duty free goods.• Can make the exporter more competitive then other non-participating

countries• There has been great increase in trade among the three countries and market

access within each country also increased considerably.• Mexico’s poverty rate decreased and real income increased, even after

economic crisis 1994-1995• NAFTA had been beneficial to business owners and elites in all three countries• Free trade increases sales and profits for Mexico, Canada and the U.S.A., thus strengthening their economies.

• Lack of tariffs has allowed Mexico to sell its goods in the USA and Canada at lower prices. This makes Mexican products more competitive in these markets and increases Mexico’s profits as it tries to develop its economy.

• Free trade is an opportunity for the U.S. to provide financial help to Mexico by making jobs available in factories located there.

Cons It has negative impacts on farmers in Mexico who saw food

prices fall based on cheap imports from U.S. agribusinessFree trade has caused more U.S. jobs losses than gains, especially for higher-

wage jobs. 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

CONCLUSION

• NAFTA has played an important role in the overall development of the three nations

• - the progressive elimination of tariffs & trade barriers, • Dispute resolution• Commitment to intellectual property & environment legislation• Mutual entry into governmental bidding & the financial and other service

sector

• The North American Free Trade Agreement (NAFTA) revolutionized trade and investment in North America, helping to unlock our region’s economic potential.

• It has provided North American businesses with better access to materials, technologies, investment capital, and talent available across North America. 

• It has proven that trade liberalization plays an important role in promoting transparency, economic growth, and legal certainty.