PROJECT BY: - Bhavik Shah PG Neel Merchant PG Pooja Gala PG Ruchika Gupta PG Sunny Shah PG0850

1992 Signed by the three countries 1993 Ratification by the three countries legislatures Signed into law 1994 Came into Effect NORTH AMERICAN FREE TRADE AGREEMENT

It superseded the Canada- United States Free Trade Agreement between the U.S. and Canada World’s largest free trade area in terms of GDP In terms of combined purchasing power parity (GDP) The trade block is the largest in the world Second largest by nominal GDP comparison

Why Was NAFTA Formed ? Article 102 of the NAFTA agreement outlines its purpose:  Grant the signatories “Most Favored Nation” status  Eliminate barriers to trade  Facilitate the cross-border movement of goods and services  Promote conditions of fair competition

Contd…..  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

 North American Agreement on Environmental Cooperation (NAAEC)  North American Agreement on Labor Cooperation (NAALC)

Creates a framework to : - Better conserve - Protect - Enhance …..the North American environment Concrete measures to further cooperation on these matters between the three countries

 The first international agreement on labor to be linked to an international trade agreement  Provides a mechanism for member countries to ensure the effective enforcement of existing and future domestic labor standards and laws without interfering in the sovereign functioning of the different national labor systems

 To improve working conditions and living standards in each Party's territory  To promote, to the maximum extent possible  To encourage cooperation to promote innovation and rising levels of productivity and quality  To encourage publication and exchange of information, data development and coordination, and joint studies  To pursue cooperative labor-related activities on the basis of mutual benefit  To promote compliance with, and effective enforcement by each Party of, its labor law  To foster transparency in the administration of labor law

 Exports totaled $452 billion; Imports totaled $568 billion. The U.S. goods and services Trade Deficit with NAFTA was $116 billion 2007  The NAFTA countries (Canada and Mexico) were the top two purchasers of U.S. exports in (Canada $261.2 billion and Mexico $151.2 billion)  NAFTA created the world's largest free trade area, which now links 444 million people producing $17 trillion worth of goods and services  Agricultural trade has increased in both directions under NAFTA from $7.3 billion in 1994 to $32.3 billion in 2008  NAFTA Countries FDI in the United States was $219.2 billion in U.S. direct investment in NAFTA Countries is in the manufacturing, finance, nonbank holding companies and mining sectors

SOURCE: U.S. Department of Transportation, Research and Innovative Technology Administration, Bureau of Transportation Statistics, Transborder Freight Data as of October 2008.

 Private Commercial Services exports to Canada & Mexico were $66.6 billion in 2007  U.S. goods exports to Canada and Mexico grew from $142 billion in 1993 to $364.6 billion in 2006, an increase of 157%. NAFTA countries Top 2 Importers  U.S. exports of agricultural products to NAFTA countries totaled $32.3 billion in  U.S. supplies more than 75% of Mexican agricultural products

 NAFTA countries were the largest and third largest suppliers of goods imports to the United States in (Canada $339.5 billon, and Mexico $215.9 billion)  Private Commercial Services imports were $40.2 billion in 2008  The five largest categories in 2008 were Mineral Fuel and Oil (crude oil) ($157.8 billion), Vehicles ($79.7 billion), Electrical Machinery ($63.5 billion), Machinery ($46.5 billion), and Special Other (returns) ($14.3 billion).

 One of NAFTA's biggest economic affects on U.S.-Canada trade has been to boost bilateral agricultural flows Canada is the leading importer of U.S. agricultural products  Trade in services with the United States reached $91.3 billion in 2008, up from $42.3 billion in 1993  Canada ships 87 % of its merchandise trade exports to the United States, and receives 63% of the goods it imports from the United States.

United StatesMexico Two-way merchandise trade with Canada $ billion (2008)$ 23.8 billion (2008) Canadian merchandise exports$ billion (2008)$ 5.8 billion (2008) Canadian merchandise imports$ billion (2008)$ 17.9 billion (2008) Canadian direct investment, stock $ billion (2008)$ 4.5 billion (2008) Canadian commercial services exports $ 24.1 billion (2008)$ 222 million (2006*)

 new market opportunities  new customers  new links in supply and production chains  new partnerships  new investors  new choices for consumers

 Canadian employment levels have also shown steady gains in recent years, with overall employment rising from 14.9 million to 15.7 million in the early 2000s.

 Canada's GDP has grown at a faster rate than either Mexico's or the United States' since 1994  Between 1994 and 2003, Canada's economy showed average annual growth rates of 3.6 percent, compared to 3.3 percent in the United States and 2.7 percent in Mexico

 Under NAFTA Canada lost control over its energy resources  With “NAFTA-plus”, it could also lose control over its freshwater resources  Water transfers from Canada to the United States are emerging as an issue under the auspices of the Security and Prosperity Partnership (SPP).

 1930s – 1980s: Strong protectionist trade policy  1980s: Inflation and declining standard of living  1982: Debt crisis  1980s – 1990s: Series of measures to restructure the economy that included steps toward unilateral trade liberalization  Mid 1990s: Financial crisis

 To increase export diversification by attracting FDI  Create jobs  Increase wage rates  Reduce poverty.

IMPACT ON INDIA

 Setback for textile industry  The formation of NAFTA led to displacement of non-members by members  Trade barriers for third countries  Export of Primary goods  India’s position declined as agriculture producers  Commodities also declined

 India’s exports have increased since jan to oct-2003 by 11.5%  Imports to Canada declined by 3.28% and exports increased by 9.10%  India's exports also marked a healthy trend of 22 per cent to Mexico

 USA  Canada  Mexico

 Largest trading partner  Accounting 22% of India's global exports  Exports have grown by 11.55% and global imports increased by 8.8%  Among its 25 large export destinations, the growth rate in exports to India continues to be the highest, more than even China

 Fertilizers exports of USA have also grown significantly to US $ 87.9 million during January – October 2003, as against only US $ 34.2 million for the same period in  Growth in other sectors as well.

 Indian exports to Canada have increased by 9.1% in 2003  Exports products of India have shown a positive growth except cotton yarn and fabric.  India is the 18 th largest exporter of goods to Canada.  Exports had been gradually declined in earlier period..

 Organic chemicals have shown a growth of 35.67% closely followed by iron & steel products.  Paper and paperboard have shown massive growth of 136%, followed by aircraft and inorganic chemicals.

 India’s export to Mexico showed a positive growth of 22%  India’s market share has risen to 0.32% up from 0.26% in 2002  Amongst the top 30 exporting countries to Mexico, only 8 have registered a growth of over 20% in their exports and India is one of them.  India’s share in total Mexican exports is 0.26%

 Between 1993 and 2006, trade among NAFTA partners climbed 197%, from $297 billion to $883 billion  U.S. exports to NAFTA partners grew 157%, versus 108% to the rest of the world in the same period  Daily NAFTA trade in 2006 reached $2.4 billion  U.S. manufacturing output rose 63% from , compared to an increase of 37% from OVERALL IMPACT

 Trade between the three countries has tripled, reaching billion dollars in 2007  China to be the fourth partner  The economic difficulties in the US now augur for Mexico a significant reduction in exports, a shrinking growth rate projected at less than 0.5 per cent in 2009

CONCLUSION  NAFTA is a classic example of the benefits countries can derive by moving towards multilateral trade agreements  Further trade liberalization between neighboring countries FTAs  Protecting environment and labour  Free Trade Area of the Americans FTAA  Future for India