1 / 17

NAFTA Class Presentation

NAFTA Class Presentation. By Théo Le Morvan 14 th of November 2012. Contents. What is a Trade bloc ? What is NAFTA ? Consequences of NAFTA on USA and Mexico Advantages Disadvantages Conclusion. 1. What is a Trade bloc ?.

john
Download Presentation

NAFTA Class Presentation

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. NAFTA Class Presentation By Théo Le Morvan 14th of November 2012

  2. Contents • Whatis a Trade bloc ? • WhatisNAFTA ? • Consequences of NAFTA on USA and Mexico • Advantages • Disadvantages • Conclusion

  3. 1. What is a Trade bloc ? • A Trade Bloc is a group of countries that share trade agreements between themselves. • Its objectives: stimulate trade to obtain benefits from economic co-operation

  4. Economic integration We recognise 6 main stages that add up to fill a complete economic integration • Free trade areas • Customs unions • Common markets • Customs and monetary unions • Economic unions • Economic and monetary unions

  5. Economicintegration stages Economicand monetary union (CSME/EC$, EU/€) Economic union  (CSME, EU) Customs and Monetary Union  (CEMAC/franc, UEMOA/franc) Common market (EEA, EFTA, CES) Customs union (CAN, CUBKR, EAC, EUCU, MERCOSUR, SACU) Free Trade Area(AFTA, CEFTA, GAFTA, NAFTA, SAFTA, etc.)

  6. A little bit of history... • 1sttrade bloc was the “German customs union” initiated in 1834. • 1947: the General Agreement on Tariffs and Trade (GATT) was created shortly after World War II, between twenty-three countries, to facilitate and coordinate trade between the nations. • 1951: EEC European Economic Community formed by the 6 first countries • In 1995, during the Uruguay round of GATT negotiations, the World Trade Organization (WTO) was created • The Maastricht Treaty established the European Union under its current name in 1993 • 1994 beginning of NAFTA • In 1997, more than 50% of all the world commerce is conducted by trade blocs.

  7. Similarities between members of Trade Blocs • Need to improve level of business • Similar level of GNP per capita • Geographical proximity • Similar trading regimes • Similar political commitments and willingness

  8. 2. NAFTA • NAFTA is short for the North American Free Trade Agreement. • NAFTA exists between Canada, the U.S.A 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 become more competitive in the global marketplace.

  9. 2. Why NAFTA ? • To eliminate barriers to trade and facilitate the cross-border movement of goods and services. • To promote conditions of fair competition. • To increaseinvestmentopportunities. • To provide protection and enforcement of intellectual property rights. • To create procedures for the resolution of trade disputes.

  10. Trade flows in NAFTA

  11. 2. NAFTA’s main benefits • By eliminating tariffs it: • reduces inflation by decreasing the cost of imports. • creates agreements on international rights for business investors • reduces the cost of trade, which boosts investment and growth especially for small businesses. • forces companies to adopt higher foreign standards and business practices. • Such processes will gradually improve the global competitiveness of businesses.

  12. 2. NAFTA’s advantages (1/2) • NAFTA increased trade in Goods and Services: • By 2007, exports from the U.S. to Canada and Mexico had grown from $142 billion to $452 billion. • Exports from Canada and Mexico to the U.S. had increased from $151 billion to $568 billion. • NAFTA boosted Farm Exports: • U.S. agricultural exports to Mexico grew from 15% of total U.S. farm exports in 1993 to 24% in 2007. • Mexican exports to U.S. and Canada nearly doubled since 1993, growing by 156% compared to a 65% growth with the rest of the world. • NAFTA increased Services’ Profits • More than 40% of U.S. GDP is created through service industries. • NAFTA boosted U.S. service exports to Mexico from $15 billion in 1993 to $52 billion in 2007.

  13. 2. NAFTA’s advantages (2/2) • NAFTA led to an increase in US Employment: • U.S. employment rose from 110.8 million in 1993 to 137.6 million in 2007, increase of 24 %. • The U.S. unemployment rate averaged 5.1 % for the first 13 years after NAFTA, compared to 7.1 % during the 13 years prior to the agreement. • NAFTA reduced Oil and Grocery Prices: • Since NAFTA eliminates tariffs, oil prices are lower and USA can import Mexican oil for less than from elsewhere. • The same is true for food imports. • NAFTA Increased Foreign Direct Investment: • Since NAFTA was enacted, U.S. foreign direct investment (FDI) in Mexico has more than doubled to $237 billion in 2009.

  14. NAFTA’sstatistics

  15. 3. NAFTA also shows disadvantages (1/2) • U.S. Jobs Were Lost: • As labor is cheaper in Mexico, manufacturing industries moved their production from high-cost U.S. states to Mexico. • Between 1994 and 2010, the U.S. trade deficits with Mexico totaled $97.2 billion, which led to 682,900 layoffs in the US. • Nearly 80% of the losses were in manufacturing. • U.S. Wages Were Suppressed: • US companies moved from northern states to southern states where the labor costs were cheaper. • The workers had their wages growth suppressed. • Between 1993 and 1995, 50% of all companies suppressed wages. • By 1999, that rate was 65%. • Mexico's Farmers Were Put Out of Business: • Mexico lost 1.3 million farm jobs • Rural Mexican farmers were forced to start to produce nuts, peaches, olives, cucumbers, watermelons, etc. • Mexico reduced its subsidies to farmers from 33.2% of total farm income in 1990 to 13.2% in 2001.

  16. 3. NAFTA also shows disadvantages (2/2) • Maquiladora Workers Were Exploited: • NAFTA expanded the maquiladora program • This represents 30% of Mexico's labor force. • Workers have "no labor rights or health protection, workdays stretch out 12 hours or more, and if you are a woman, you could be forced to take a pregnancy test when applying for a job." • Mexico's Environment Deteriorated: • Mexican agricultural sector have to use more fertilizers and other chemicals, that all contribute to pollution. • Deforestation of 630,000 hectares per year.

  17. Conclusion • The opinion about NAFTA remains divided. • Analysts say it is too early yet to judge NAFTA’s impact • It is urgent to treat is the exploitation of the Mexican human and environmental resources. • US withdrawing from the international trading system would allow the European Union and fast-growing Asian countries to take the lead in trade negotiations. • Mexico will become an ever-more attractive destination for foreign investment. • United States needs to stay in NAFTA to ensure economic growth and a dynamic economy in the future.

More Related