north american free trade agreement
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N A F T A
Promises and Consequences…
MD Siyam HossainBangladesh Institute of Business & Technology
Narayangonj,DhakaDhaka,Bangladesh
Overview
Tarun Biju – Introduction Indranil Dutta – Opposition
– Impacts on Canada Nola Lamoureux – Ross Perot’s Prediction
– Impacts on USA Arpan Munier – Renegotiation
– Impacts on Mexico Tarun Biju – Conclusion
MD Siyam Hossain
NAFTA - Introduction
Each NAFTA country retains its external tariffs vis-à-vis non-members' goods
Levies a lower tariff on the goods "originating" from the other NAFTA members
Differences in the sizes of the 3 participating nations – USA (88.4% ~ US 10.4 trillion), Canada(6.2%) and Mexico(5.4%) of NAFTA area GDP
Phasing out of tariffs over a period of 14 years since its inception on 1st January 1994.
Individual companies can sue countries in case of legislation that hamper outcomes from their investments
MD Siyam Hossain
Some of the promises
Freer access to new markets (e.g. US agriculture)
Creation of new jobs Increase in the standard of living (especially in
Mexico) Improved environmental conditions
MD Siyam Hossain
Opposition
Labour Unions in US and Canada loss of jobs to Mexico
Politicians fear of ‘branch plant’ economy
Farmers in Mexico agricultural subsidies in US
Environmental and social justice organizations adverse environmental impacts loss of control over domestic policy making
MD Siyam Hossain
Impacts on Canada
Canada – US: (1989 – 2002) US exports to Canada – 100%(↑) US imports from Canada – 133% (↑)
Canada – Mexico: (1989 – 2002) Canadian exports to Mexico – $3.2 billion Canadian imports from Mexico – jumped five
fold to $13.2 billion.
MD Siyam Hossain
Impacts on Canada
6% growth in bilateral trade with a 40% appreciation to CDN$
Trade & linkages growth Force companies to improve to compete in North
America, therefore they are better able to compete globally
Border problems and unfinished business (softwood lumber) ~ capped to 34%
Canadian farmers effected by lower prices
MD Siyam Hossain
Perot’s predictions
No SUCKING sound! Jobs were created in Mexico, but there was
no net loss of jobs in the US. Many jobs moved, but many jobs were
created. E.g. Michigan the unemployment rate was
3.2% in Aug 1999.
MD Siyam Hossain
Impacts on the U.S. Relaxed investment restrictions Helped US deal with European competitors in
Mexico Manufacturing jobs in the US declined
Wages remain stagnant US workforce shifting from manufacturing to service jobs Increased differences in income
Weakening of unions Increase in competition Strengthening of multinational companies Increase in insecurity
MD Siyam Hossain
Impacts on the U.S.
Certain industries (automobiles) benefited greatly.
US Independent Truckers are opposed to giving Mexican truckers greater access to the US. (Aug 2006)
Agribusinesses (ADM, Cargill) benefited over independent farmers. Volume of trade has increased Prices paid to farmers decreased
MD Siyam Hossain
Renegotiation
Lopez Obrador rejects the opening of Mexico’s corn & bean markets to US exports.
Transition has been slow so he is trying to convince people to go back to the old ways, a centrally planned economy.
Appeals to rural Mexicans who did not benefit from NAFTA
MD Siyam Hossain
Impacts on Mexico
Success of Mexican “maquiladoras” Labour intensive units, imports inputs from the US, processes
them for re-export. Increased employment for Mexicans, increased supply for the
US, ensuring lower prices
For Mexico : “trade without development” (Wise and Gallagher)
Foreign investment increased, exports grew, employment rose Crowding to urban areas, adverse environmental effects Companies shifting to Asia to lower costs, manufacturing sector
in decline. Cannot fight poverty by trade alone.
MD Siyam Hossain
Impacts on Mexico
Migration of Mexicans campesinos to the US due to loss of farming income Remove quotas and price floors. Loss in biodiversity due to the monoculture nature of
agribusiness.
MD Siyam Hossain
References http://www.dfait-maeci.gc.ca/eet/research/nafta/nafta-en.asp#part http://www.citizen.org/trade/nafta/ http://www.dollarsandsense.org/archives/2003/0103dollar.html http://www.yaleeconomicreview.com/issues/spring2005/nafta.php http://www.citizen.org/documents/NAFTA_10_ag.pdf http://www.citizen.org/documents/NAFTA_10_mexico.pdf http://www.citizen.org/documents/NAFTA_10_jobs.pdf Border conflict, Keane, A.. Journal of Commerce. New York:Aug 7, 2006. p. 33 Mexican Watershed, Wall Street Journal. (Eastern Edition ). New York:Jun 29, 2006. p. A.14 Jesse vs. the Sour Grapes, Wall Street Journal. (Eastern Edition ). New York:Sep 20, 1999.
p. A28 NAFTA at eleven, Cooper, J. CMA Management. Hamilton:Oct 2005. Vol. 79(6), p. 52-53
(3 pp.) World economy: Not all Nafta foes are Perot followers, but their opposition runs just as deep
Keatley, R. Wall Street Journal. (Eastern Edition ). New York,:Nov 12, 1993. p. PAGE A11 Nafta's Birthday Party, O'Boyle, M. Business Mexico. Mexico City:Feb 2004. Vol. 14(2), p. 28-33
(6 pp.) Why labor hates NAFTA, Richman, L. Fortune. New York:Nov 15, 1993. Vol. 128(12), p. 28
(1 pp.) NAFTA and illegal immigration, Field, A. Journal of Commerce. New York:May 22, 2006. p. 1
MD Siyam Hossain
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