NAFTA EconomyNAFTA Economy
Mark Kasoff
Three things to know about NAFTA:1. What it is and is not2. Size of economy and trade3. CDA-U.S. Trade
North American Free North American Free Trade AgreementTrade Agreement
Successor to 1988 Canada-U.S. Free Trade Agreement (CUSTA).
In force since 1994. Removes Most Tariffs (import
taxes).Rules of Origin prevent cheating by other
countries.
Equal Treatment for Direct Investment.
Ma Maision est Votre Maison, My House is Your House, Mi Casa es Su Casa
Environmental Side Accord
Labor Side Accord
NAFTA
Why Join a Trade Bloc? Everybody Else is Doing It!
(EU)
Referees Make Better Calls than Players (Trade Dispute Remedies)
Don’t Slam that Door! (Assured Access)
Bigger Really is Better (Economies of Scale)
What NAFTA Doesn’t DoWhat NAFTA Doesn’t Do
Barriers to Free Movement of People and Goods Remain
The Border: Remains a customs checkpoint
Agriculture & Textiles: Still subsidized & protected
Cultural Industries: “Protected”
Energy & Softwood Lumber: Managed via separate accords
Trucking: Drivers are restricted
Harmonized Standards: Different weights, measures, labeling rules, etc.
Share of North American Share of North American Economy & PopulationEconomy & Population
GDP (Gross Domestic Product): Total final output of national economy.
CDA 7.5%
USA 84.8%
MEX 7.7%
CDA 8%
USA 68%
MEX 24%
GDP Population
Relative Standard of LivingRelative Standard of Living
GDP per Capita: Total final output of national economy divided by total population.
CDA
$34,058
USA
$41,789
MEX
$10,627
GDP per Capita
NAFTA and the U.S. NAFTA and the U.S. (US$ Billions)(US$ Billions)
Exports to Imports from
$230.6 $303.4
$134.2 $198.3Mexico
U.S.
Canada
•2006 U.S. trade with Canada and Mexico set record highs.
•Since NAFTA, trade between Canada and Mexico has tripled but remains small.
Canada-U.S. Two Way Canada-U.S. Two Way Merchandise TradeMerchandise Trade
That’s no small change!
$534 billion/year$1.5 billion/day$1 million/minute
Motor VehiclesOil & Coal
Machinery Electronics
Plastics