NAFTA Agreement

NAFTA Agreement

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  Table of Content 1.Introduction 2. Brief History (Timeline) • The Proposal • Financial crisis in Mexico • Change in Ministry in Canada • Mexican government seeking alternative • CUSFTA signing and putting it into effect • Negotiation between Mexico and USA • Canada request for Trilateral agreement • Signing NAFTA • NAFTA into effect 3. Objectives of Trade Agreement 4. Pros of the Trade Agreement 5. Cons of the Trade Agreement 6. Conclusion 7. Bibliography
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  1. Introduction • NAFTA(North American Free Trade Agreement) is an agreement singed between Canada, Mexico and United States. • The free trade area between the United States, Canada, and Mexico is the largest in the world, with a gross domestic product of 20 billion dollars; it is estimated that its economic output is even greater than all the countries that make up the European Union. • It came into effect on January 1, 1994. • The main purpose of this agreement is to eliminate all trade and investment barriers between the three countries.
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  2. Brief History •The idea of making North American free trade area was raised by U.S. President Ronald Reagan in 1979. Both Canada’s Prime Minister Pierre Trudeau and Mexican President Jose Lopez Portillo were worried regarding the U.S. dominance to the market and showed no interest in such a deal. • Meanwhile, in 1981-82, Mexico experienced a huge debt crisis. During this period the country’s foreign debt exceeded their ability to pay. And leaders from Mexico’s dominant party, the Institutional Revolutionary Party(PRI), began to seek alternatives to the country’s nationalist economic model. USA – Canada 1979 1982 Timeline Mexico The proposal Financial debt
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  2. Brief History •In 1984, with a change in government in Canada with the election of Progressive Conservative prime minister Brian Mulroney, led to negotiation of CUSFTA. There was strong opposition to CUSFTA within liberal and democratic parties in Canada. However, there was less opposition from the labour group for this trade agreement in U.S. • With pressure from the International Monetary Fund and World Bank, Mexican government began to open up their economy, and joined the GATT(General Agreement on Tariffs and Trade in 1986, which was originally signed in 1947. • However, international investors still doubted the stability of Mexican market. USA – Canada 1984 1986 Mexico Change in Ministry Seeking Alternative
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  • Canada-US freetrade agreement(CUSFTA) came into effect on January 1, 1989. 18th Canadian Prime Minister Martin Brian Mulroney September 17, 1984 – June 25, 1993 40th U.S. President Ronald Wilson Reagan January 20, 1981 – January 20, 1989 Signed CUSFTA in 1988. 1988 1989
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  41st U.S. President GeorgeH.W. Bush January 20, 1989 – January 20, 1993 Former Mexican President Carlos Salinas de Gortari December 1, 1988 – November 30, 1994 Negotiated for a liberalized trade agreement between Mexico and United States. • Before, NAFTA, Mexican tariffs on U.S. imports were almost 250% higher than U.S. tariffs on Mexican imports. • The Canadian government were hesitant to share their preferential access to the huge U.S market with Mexico. They also had little interest in Mexican market. However, Mulroney government decided that it would be better to be a part of the negotiation than face a deal between U.S and Mexico that might divert trade and investment from Canada. 1990
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  • In 1991,Canada requested for making a trilateral agreement between USA, Canada and Mexico. 1991
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  • In 1992,NAFTA was signed by President George H.W. Bush, Mexican president Salinas and Canadian Prime Minister Brian Mulroney. 1992 From left to right: Mexican president Carlos Salinas, US president George H.W. Bush and Canadian prime minister Brian Mulroney participate in the initialing ceremony of NAFTA in San Antonio, Texas, 7 October 1992
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  • Before NAFTAcame into effect, it was ratified by the legislature of all the three countries. • Out of 230, 200 members of U.S. House of Representatives agreed for NAFTA. And 38 of 60 U.S. Senate members approved for it on November 20. President Bill Clinton signed NAFTA on 8th December, 1993. NAFTA came into effect on January 1, 1994. 1993 1994
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  3. Purpose orobjectives of trade agreement • To remove trade and investment barrier between three nations. • To facilitate cross-border movements of goods and services. • To promote fair competitions. • To increase investment opportunities. • To protect intellectual property rights. • To create procedures for the resolution of trade disputes. • To establish an effective framework. (Government of canada, 2016)
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  4. Pros ofthe trade agreement • Increase in trade revenue. • Reduction in tariffs and import prices. • Decrease in prices of food. • Economic growth in various sectors. • Increase in exports of agricultural products. • NAFTA strengthened the automotive industry. • Created millions of jobs. • Increase in foreign direct investment. • NAFTA protects intellectual properties. (Amadeo, 2018)
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  5. Cons ofthe trade agreement • Loss of jobs in USA and Canada. • Wages were suppressed in U.S. • Low job security in U.S. & exclusion of worker’s rights • Mexico's farmers were put out of business . • Environmental hazard. • Maquiladora workers were exploited. • NAFTA called for free U.S. Access for Mexican trucks. • Losses in weaker Canadian industries (wine & textiles). (Amadeo, NAFTA's 6 negative effect, 2018)
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  6. Conclusion • NAFTAbecame foundations for strong economic growth, rising prosperity and strong trade relations • But many critics sees NAFTA as an experiment done by influential multinational companies seeking to increase profit at the expenses of the ordinary citizens. • Trade relations expanded rapidly, but political co-operation remained weak. • NAFTA continues to be a topic of controversy, as U.S. president, Donald Trump has threatened to renegotiate or cancel the deal. • The North American Free Trade Agreement created the world's largest free trade area. It links 450 million people. Its member economies generates $20.8 trillion in gross domestic product.
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  Bibliography • Amadeo, K.(2018, February 18). The balance. Retrieved April 03, 2018, from https://www.thebalance.com/advantages-of-nafta-3306271 • Amadeo, K. (2018, February 18). The balance. Retrieved April 03, 2018, from https://www.thebalance.com/advantages-of-nafta-3306271 • Government of canada. (2016, november 30). North American Free Trade Agreement. Retrieved from Government of canada website: http://www.international/gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/nafta-alena/fta-ale/01.aspx?lang=eng.