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.

Canadian GDPCanadian GDP

Construction6%

Manufacturing18%

Other3%

Resource-Based

6%

Services67%

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

Exports to Canada by StateExports to Canada by State

(1)

(2)

(3)

(Rank)

Oregon-Canada Trade

•18% ($2.7 bn) of Oregon exports go to Canada.

•Canada is Oregon's biggest growth market, in dollar terms. Export shipments to Canada increased $1.3 bn since 2002.