Levels of Economic Integration

Early Development Free trade as an alternative of annexation. Elgin-Marcy Treaty of 1854—free trade agreement between U.S. and Canada. Not implemented because of civil war. In 1911, U.S. proposed trade agreement, but rejected by the Canadian Parliament. Protectionism in the 1920s-1930s. Trade negotiations after WWII was not successful. GATT (1947) provided alternative that discouraged trade talks between U.S. and Canada.

From CFTA to NAFTA In 1986, Uruguay Round was initiated, but seemed endless. Frustrated with the progress, the two countries began to engage bilateral trade negotiation. CFTA took effect January 1, After CFTA, Mexican Government looked for alternatives, but without success. Finally decided to negotiate with the U.S. Negotiation –1n 1991, the negotiations to create NAFTA began. –In 1992, President Bush (lame-duck) signed the NAFTA agreement. –Clinton added two supplemental agreements: Labor and Environment. Ratification –U.S.: In 1993, the Senate ratified the agreement over fierce opposition: Public Law No The NAFTA Implementation Act expressly provides that the NAFTA agreement does not modify U.S. law except as provided for the by the Act. – Canada: Mulroney Government approved the NAFTA agreement before it lost election. –Mexican: No difficulty at all.

Impact of NAFTA Canada: unemployment U.S.: Labor and Environment Mexico: Maquiladoras –Rules of Origin

NAFTA Goods –Deadlines for elimination of tariffs on goods: U.S. and Canada, 1998 Mexican, 2003 By 2008, all North American trade in goods is duty free. Services –CFTA— “Positive List”; NAFTA –- “Negative List” (broader) –Foreign Legal Consultants –NAFTA Business Visas: preferential treatment for citizens in three countries. Investment –Article 11 Minimum Standard of treatment Prohibition of expropriation –Metalclad Corp. v. United Mexican StatesMetalclad Corp. v. United Mexican States IP –Copyright, patent, trademarks

Dispute Settlement Chapter 19—antidumping and countervailing duty disputes Chapter 20 general dispute settlement procedures Chapter 11 investor-state arbitration procedures Chapters 6, 9, 10 Environmental and labor cooperation disputes

Panels Binational panels Each party to the dispute chooses two panelists; the fifth is chosen either by agreement or by lot if no agreement.

Research NAFTA Agreement Panel Decisions Domestic Cases Arbitration Rule and Cases