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EXECUTIVE SUMMARY

This project is about of NAFTA (North American Free Trade Agreement). It is a


trading part of trading block which support the international trade and
remove the barriers between member countries.
U.S. agricultural trade with Canada and Mexico has nearly doubled since the
implementation of the North American Free Trade Agreement (NAFTA). While
only a portion of this overall increase can be attributed solely to the
agreement, NAFTA has allowed competitive market forces to play a more
dominant role in determining agricultural trade flows among the three
countries.
By dismantling numerous trade barriers, the agreement has contributed to an
expansion in U.S. agricultural exports and increased the domestic availability
of various farm and food products. In addition, NAFTA has established rules
and institutions that mitigate potential trade frictions and promote foreign
direct investment.
Conversely, many of the initial trepidations that were voiced concerning
declining agricultural employment and environmental degradation have not
materialized. Thus, NAFTA should be judged not just in the context of the
trade gains associated with the agreement's agricultural provisions, but also
in terms of the benefits derived from locking in key trade, investment, and
institutional reforms in an increasingly integrated North American market.

INTRODUCTION
The North American Free Trade Agreement (NAFTA) is an agreement signed by
the governments of Canada, Mexico, and the United States, creating a
trilateral trade bloc in North America. The agreement came into force on
January 1, 1994. It superseded the Canada United States Free Trade
Agreement between the U.S. and Canada. In terms of combined GDP of its
members, as of 2010 the trade bloc is the largest in the world.

NAFTA fuels economic growth and dynamic trade, stimulates investment


while creating productive partnerships, works for small and medium-sized
businesses and provides fairness and certainty. NAFTA partners promote
environmental protection, and provide greater job opportunities in North
America. With the entry in force of the North American Free Trade Agreement

(NAFTA), the Parties have experienced a significant increase in the trade of


goods and services between them.
The three Customs Administrations have agreed that the Rules of Origin as
set out in the NAFTA and the NAFTA Rules of Origin Regulations (the
Regulations), define the framework to be observed by exporters/producers in
order to have their goods qualify as "originating goods", and be eligible for a
NAFTA preferential tariff treatment when imported into the territory of any of
the other Parties to the Agreement. As a result, it has become important for
the Customs Administration of each Party to verify that the goods for which
NAFTA preferential tariff treatment has been claimed comply with the Rules of
Origin.
In this respect, the three Customs Administrations have considered that the
establishment of verification guidelines is important and useful. The Customs
Administrations of all Parties have consulted during the development of this
manual and these guidelines include general, examination and reporting
standards for NAFTA origin verifications.
This manual is intended to be used by: Origin Audits Unit of Revenue Canada
(Canada);Direction of International Audit of the Ministry of Finance and Public
Credit (Mexico); and, the offices of Regulatory Audit and Field Operations, U.S.
Customs Service (United States).However, portions of this manual may also
be used by other areas within each Customs Administration as deemed
appropriate the main purpose of this document is to establish the
recommended technical verification framework to be observed when
conducting NAFTA verifications.
The application of the provisions included therein should take into
consideration the circumstances involved in each verification and be adapted
accordingly. It is understood that this document will be updated on a
continual basis. This of the NAFTA Verification Manual provides revisions to
the November 1995 version to reflect changes in the Regulations which
became effective on October 1, 1995.Isolating the effects of NAFTA on its
partner countries is particularly difficult given the significant other shocks
that have occurred over the past decade. NAFTA undoubtedly had a
significant impact on the macroeconomic environment facing Mexico, given
the decline in trade barriers and increased market access that the agreement
provided Mexico.
The key provisions of NAFTA and changes in trade barriers between the
member countries are documented in Section II. However, as discussed in
Section III, distinguishing the effect of these changes is complicated by the

fact that many of these were anticipated well in advance of the agreements
ratification, and by the fact that the liberalization was phased in only
gradually. In addition, a host of significant other shocks had important
effects on Mexico and its NAFTA partners during this period, including:
(i)
(ii)
(iii)

(iv)

The severe financial crisis that Mexico suffered in 1994 (the Tequila
crisis), which forced a sharp devaluation of the peso;
The wide range of other free trade arrangements that the NAFTA
partners signed during the same period; and
The broader global cyclical environment, which included a recovery
from recessions in the early 1990s, the boom through to the end of
the decade, and the more recent global slump. The increase in
regional integration among NAFTA partners has had a substantial
effect on business cycles in Mexico. Section V documents that output
variability declined in Mexico after the inception of NAFTA, and
Section VI shows that there has been a significant increase in co
movement of business cycles within the NAFTA region during the
past decade. Deeper analysis using a dynamic latent factor model
suggests that these stylized facts reflect the manifestation of
structural changes in the Mexican economy that have decreased the
role of country-specific shocks in driving the Mexican business cycle
and led to a concomitant increase in the role of region-wide shocks.
The importance of structural factors is further confirmed by studying
a stochastic dynamic general equilibrium model, which is calibrated
to reflect some basic features of the NAFTA economies. The model
illustrates that
reductions in trade frictions that boost trade flows can cause a
concomitant increase in business cycle interdependence.

NAFTA also appears to have favourably affected Mexicos growth


performance over the past decade. This conclusion is confirmed by a broad
range of studies, which are surveyed in Section VII. In particular, there has
been a dramatic increase in the average growth rate of investment after
NAFTA. The dynamics of economic growth in Mexico also have changed as
contributions of exports and investment to GDP growth have sharply
increased following the introduction of the agreement. Moreover, using
industry- and firm level data, recent empirical studies suggest that NAFTA has
significantly improved total factor productivity in Mexico.

How it works/Example:

NAFTA was implemented on January 1, 1994, and supersedes the U.S.-Canada


Free-Trade Agreement (CFTA) that took effect on January 1, 1989.
A tariff is a federal tax on imports or exports. NAFTA required the elimination
of tariffs on half of U.S. goods shipped to Mexico and the gradual phase out of
other tariffs among the U.S., Canada and Mexico over a 14-year period.
Because tariffs make it more expensive for consumers to purchase foreign
goods, imports tend to decline when tariffs are high, which in turn causes a
decline in the supply of the good and an increase in the price of the good. The
price increase usually motivates domestic producers to increase their output
of the product.
For example, let's assume Company XYZ produces cheese in Scotland and
exports it to the U.S. The cheese costs $100 per pound but is subject to a
20% ad valorem tariff placed on the cheese by the U.S., which forces
Company XYZ to pay the U.S. government an extra $20 to export it. Company
XYZ would presumably mark the price of the cheese up to at least $120 in
order to recover the cost of the tariff.
Under NAFTA, if the exporting and importing takes place within Canada, the
United States and Mexico, the cheese would be subject to a much lower (or
even no) tariff, presumably making the cheese cheaper than a Scottish
import.

Why it Matters:
NAFTA is essentially a tariff agreement designed to facilitate trade and ensure
that North American producers receive preferences over goods not originating
in the U.S., Canada or Mexico. According to the International Monetary Fund,
trade among the three NAFTA countries more than tripled between 1993 and
2007.
But NAFTA is also highly controversial. Some economists and policy analysts
argue that tariffs interfere with free market ideals by diverting resources to
industries in which the U.S. is a less efficient, high-cost producer. Another
common argument is that NAFTA encourages companies to outsource
American jobs to lower-cost countries and the loss of tariffs reduces the
money available for government programs.

GOALS & OBJECTIVES OF NAFTA

This report has two objectives. First, is set out to determine how the quality of
life in North America, particularly in Mexico, has fared as a result of trade
liberalization in North America. While we touch on the experience of all three
countries, we emphasize Mexicos experience since the enactment of NAFTA,
as it is more relevant to other developing countries interested in
strengthening their economic ties with wealthy countries such as Canada and
the United States.
The study is different from those already done by some research institutions,
advocacy groups, and intergovernmental organizations because we answer
this question about the lessons of NAFTA by analysing what conventional
NAFTA studies pass over. The analysis focuses on people, their communities,
and the choices they make as they attempt to negotiate their social and
economic environments.
They emphasize changes in household income, pay checks and productivity,
rural employment, and agricultural production and land use, and the overall
effect of these changes on migration and environmental quality. They then
examine how NAFTAs trade rules and institutions played a role in these
changes. In short, while most positive analyses focus on the macro level and
most negative analyses rely only on losses and not gains, our analysis
provides a rigorous and balanced assessment of NAFTA by focusing on its
effects on peoples lives, livelihoods, and households.
Their second objective is to offer insights to other countries, particularly in
Latin America, that are interested in strengthening their bilateral and
multilateral economic ties within the region. While not entirely similar,
Mexicos economic and cultural history and rich ecosystem are more closely
linked to those of its Latin American neighbours than to those of the United
States or Canada. These similarities mean that NAFTAs record can offer
insights to other countries as they consider the potential costs and benefits of
agreements such as CAFTA and FTAA.

Goals of NAFTA
NAFTA was created to eliminate barriers to trade and investment between the
US, Canada and Mexico. The implementation of NAFTA immediately
eliminated tariffs on more than one-half of Mexico's exports to the US and
more than one-third of US. exports to Mexico. Within 10 years of
implementation, all US-Mexico tariffs would be eliminated except for some US
agricultural exports that were to be phased out within 15 years. NAFTA also

seeks to eliminate non-tariff trade barriers and to protect the intellectual


property right of the products.
In the area of intellectual property, the North American Free Trade Agreement
Implementation Act made changes to the copyright law of the US,
foreshadowing the Uruguay Round Agreements Act of 1994 by restoring
copyright (within NAFTA) on certain motion pictures which had entered the
public domain.

REVIEW OF THE LITERATURE


One of the major objectives of NAFTA from the Mexican governments point of
view was to modernize agriculture, increase productive efficiency, and reduce
the high cost of agricultural subsidies. While many of these changes have
taken place within the Yaqui Valley, along with these benefits participation in
NAFTA has incurred social consequences that, though predicted, have largely
gone unaddressed by government policy.
On the positive side of post-NAFTA developments, diversification is slowly
starting to occur in the Yaqui Valley, particularly with the help of private
investors. Although foreign direct investment in agriculture has not risen to
the same extent as in other sectors of Mexicos economy, foreign companies
interested in the promotion of modern production technologies have played
and will continue to play an important role.
Current changes in agricultural production in the Yaqui Valley are as much a
result of environmental factors as of government policy. According to Luque
Favela, it has unfortunately required the problem of drought to advance the
process of diversification, as farmers are finally starting to realize the
importance of having different kinds of crops and multiple income-earning
activities, to cope with adverse climate and market conditions.
The fall in maize prices following the implementation of NAFTA reforms
caused the restructuring of the agricultural sector in Veracruz. Despite
predictions of the decline of maize production, many small-scale farmers
remained in the agricultural sector, cobbling together a livelihood through the
production of maize and the sale of various crops, through various off-farm
jobs, and through the contributions of family members working both
domestically and abroad. While the impacts of NAFTA and the lack of effective
social safety nets have adversely impacted farmers in Veracruz, many also
appear to have been surprisingly resilient in weathering the economic
changes and in grasping new trade opportunities.

Now, 10 years later, commercial maize production is going through a sort of


resurgence, as farmers in southern Veracruz fight to make it a viable incomeearning activity. Nor in northern Veracruz have farmers forgone the
production of maize. Instead, they are capitalizing on new export
opportunities involving the sale of maize husks. Throughout the state, farmers
have increasingly turned toward cooperation and collaboration as tools to
survive and even thriven conditions of economic upheaval. Farmer
organizations and cooperative marketing

NAFTA Eliminates Trade Barriers


NAFTA helped to eliminate a number of non-tariff measures affecting agricultural
trade between the United States and Mexico. Prior to January 1, 1994, the single
largest barrier to U.S. agricultural sales was Mexicos import licensing system.
However, this system was largely replaced by tariff-rate quotas or ordinary tariffs. All
agricultural tariffs between Mexico and the United States were eliminated as of
January 1, 2008. Many were immediately eliminated and others were phased out
over transition periods of 5, 10, or 15 years. The immediate tariff eliminations
applied to a broad range of agricultural products. In fact, more than half the value of
agricultural trade became duty free when the agreement went into effect. Tariff
reductions between the United States and Canada had already been implemented
under the CFTA. Both Mexico and the United States protected their import-sensitive
sectors with longer transition periods, tariff-rate quotas, and, for certain products,
special safeguard provisions. However, now that the 15-year transition period has
passed, free trade with Mexico prevails for all agricultural products.
NAFTA also provides for strict rules of origin to ensure that maximum benefits accrue
only to those items produced in North America. Tariff eliminates for qualifying
products. Before NAFTA, tariffs of 30 percent or higher on export goods to Mexico
were common, as were long delays caused by paperwork. Additionally, Mexican
tariffs on U.S.-made products were, on average, 250 percent higher than U.S. duties
on Mexican products. NAFTA addressed this imbalance by phasing out tariffs over 15
years. Approximately 50 percent of the tariffs were abolished immediately when the
agreement took effect, and the remaining tariffs were targeted for gradual
elimination. Among the areas specifically covered by NAFTA are construction,
engineering, accounting, advertising, consulting/management, architecture, healthcare management, commercial education, and tourism. Elimination of nontariff
barriers by 2008 includes opening the border and interior of Mexico to U.S. truckers
and streamlining border processing and licensing requirements.
Nontariff barriers were the biggest obstacle to conducting business in Mexico that
small exporters faced. Establishment of standards the three NAFTA countries agreed

to toughen health, safety, and industrial standards to the highest existing standards
among the three countries (which were always U.S. or Canadian). Also, national
standards could no longer be used as a barrier to free trade. The speed of exportproduct inspections and certifications was also improved. Supplemental agreements
to ease concerns that Mexico's low wage scale would cause U.S. companies to shift
production to that country, and to ensure that Mexico's increasing industrialization
would not lead to rampant pollution, special side agreements were included in
NAFTA. Under those agreements, the three countries agreed to establish
commissions to handle labour and environmental issues. The commissions have the
power to impose steep fines against any of the three governments that failed to
impose its laws consistently. Environmental and labour groups from both the United
States and Canada, however, have repeatedly charged that the regulations and
guidelines detailed in these supplemental agreements have not been enforced.
NAFTA also resulted in a substantial increase in the variety of products traded
between Mexico and its partners. The impact of increase in the variety of products
on the volume of trade between Mexico and the United States. They find that almost
25 percentage points of the 190 percent increase in Mexicos exports to the United
States was attributable to the increase in the number of traded good varieties while
more than 8 percentage points of the 93 percent increase in the exports of the
United States to Mexico was accounted for by the growth of product variety. For
example, the share of the motor cars for transport of passenger and engines
sector in total Mexican exports to the United States increased from under 1 percent
in 1988 to 15 percent in 1999.

REMOVAL OF BARRIERS TO INVESTMENT


NAFTA removes certain investment barriers, protects NAFTA investors, and
provides process for settlement of disputes between investors and a NAFTA
country. Coverage includes anticompetitive practices, financial services,
intellectual property, temporary entry for businesspersons, and dispute
settlement procedures. One of the most significant aspects of NAFTA is that it
minimizes or eliminates many requirements of foreign government approval,
which formerly posed significant barriers to investment.
NAFTA includes provisions on anticompetitive practices by monopolies and
state enterprises as well as on such practices by privately owned businesses.
It also sets out principles to guide regulation of financial services. Under
NAFTA, financial service providers from one NAFTA country may establish
banking, insurance, securities operations, and other types of financial
services in another NAFTA country. The advantage of this for investors is that

they are able to use the same financial service providers for both domestic
and international transactions.
NAFTA provides U.S. and Canadian firms with greater access to Mexico's
energy markets and energy-related services. Pursuant to NAFTA, U.S. and
Canadian energy firms are now allowed to sell their products to PEMEX,
Mexico's state-owned petroleum company, through open, competitive
bidding. Under NAFTA, for the first time Mexico is allowing foreign ownership
and operation of self-generation, cogeneration, and independent power
plants.
Transportation among the three countries is becoming more efficient and less
costly due to changes in investment restrictions. Pursuant to NAFTA, Mexico is
removing its restrictions on foreign investment for trucking firms. Since
1995, U.S., Mexican, and Canadian trucking companies have been allowed to
establish cross-border routes. Bans on such routes prior to NAFTA made
shipping across the U.S.-Mexican border costly and inefficient; goods had to
be unloaded from one truck and put onto another truck as they were moved
from Mexico to the United States, or vice versa. As we enter the 21st century,
trade is flowing more freely between the United States and Canada for a
variety of reasons.
For example, as of January 1999, a driver-record database is available for use
by law enforcement officers in each of the three NAFTA countries. But
crossing procedures at the U.S.-Mexican border continue to be inefficient. In
January 1996, an agreement was to take effect that would allow U.S. and
Mexican carriers to pick up and deliver international shipments in states
adjacent to the U.S.-Mexican border, but the agreement was blocked by the
United States. Commentators believe that the decision was based on
organized labor's opposition to NAFTA. In addition, the United States and
Mexico are still working to harmonize safety standards for motor carriers.

Under NAFTA, Mexico's pharmaceutical market is being opened to U.S.


investors. Mexico has removed its import restrictions on pharmaceutical
products, and it will phase out tariffs on such products by 2004. Mexico has
opened its government procurement contracts for pharmaceuticals to bids
from U.S. and Canadian companies.
NAFTA builds on the work of the General Agreement on Tariffs and Trade
(GATT), providing substantial protection for intellectual property. Covered are
copyrights , including sound recordings; patents and trademarks; plant
breeders' rights; industrial designs and trade secrets; and integrated circuits

(semiconductor chips). NAFTA includes details regarding procedures for


enforcement of intellectual property rights and for damages in the event of
violations of such rights. Mexico divides its intellectual property laws into two
areas: intellectual property and industrial property. Mexico adopted its new
Industrial Property Law as of 1994 and its new Federal Copyright Law took
effect in 1997. Mexico has a history, however, of weak enforcement of
intellectual property rights, and this area of law is developing slowly.
NAFTA does not create a common market for movement of labour. Thus,
provisions in NAFTA deal with temporary entry of businesspeople from one
NAFTA country into another. On a reciprocal basis, each of the three countries
admits four categories of businesspersons:
(1) Business visitors dealing with research and design, growth, marketing
and sales, and related activities;
(2) Traders and investors;
(3) Intra company transfereesprovided that such transferees are employed
in a managerial or executive capacity or possess specialized knowledge; and
(4) Specified categories of professionals who meet minimum educational
requirements or possess specialized knowledge.

LATIN AMERICAN AND CARIBBEAN COUNTRIES FACE


ANENORMOUS CHALLENGE:
How to grow their national economies, create good jobs, and generate the revenues
necessary to provide basic public goods such as human health and environmental
protection. Their task is burdened by more than two decades of weak economic
performance that has failed to create jobs for a workforce expected to grow by 1.9
percent a year from 2001-2010. Nearly one person in ten is out of work. Current per
capita income stands at a meagre US dollar 3580 and according to the InterAmerican Development Bank, approximately 150million people one out of every
three people living in Latin America and the Caribbean earn less than US dollar 2 a
day. To compound the problem, governments throughout the region admit that, while
they may have enacted sound environmental and public health laws, the laws are
rarely enforced, especially in rural areas.
Hoping to avoid another lost decade similar to the 1980 s, thirty -four
governments from the Western Hemisphere met in 1994 to outline an ambitious
agenda to advance prosperity, democratic values and institutions, and security

throughout the hemisphere. Negotiating a Free Trade Area of the Americas (FTAA)
was central to their agenda.
According to the heads of state attending the 1994 meeting, Free trade and
increased economic integration are key factors for raising standards of living,
improving the working conditions of people in the Americas, and better protecting
the environment.
Many officials and observers in the hemisphere believed that free trade would
remedy ailing economies. Twenty- five years ago, Mexico faced a similar economic
situation, and adopted a similar prescription. Mexicos earlier economic strategy of
import substitution and a large role for the public sector had increased jobs and
economic output, but it had also left Mexico with a crushing external debt that
sparked a major economic crisis in 1982. Mexican president Miguel de la Madrid
Hurtado responded by moving Mexico toward an export economy.
Despite considerable domestic opposition, in 1986 Mexico joined the General
Agreement on Tariffs and Trade (predecessor to the World Trade Organization, or
WTO).
President Carlos Salinas de Gortari built on de la Madrids initial steps toward
liberalization by reducing the size of the public sector, promoting land ownership
reform, and securing a commitment from the United States and Canada in 1991to
negotiate a free-trade agreement.2The North American Free Trade Agreement
(NAFTA) went into force in 1994, marking the first major trade deal between
developed and developing country.

Negotiation and U.S. ratification


Following diplomatic negotiations dating back to 1986 among the three nations, the
leaders met in San Antonio, Texas, on December 17, 1992, to sign NAFTA. U.S.
President George H. W. Bush, Canadian Prime Minister Brian Mulroney and Mexican
President Carlos Salinas, each responsible for spearheading and promoting the
agreement, ceremonially signed it. The agreement then needed to be ratified by
each nation's legislative or parliamentary branch. Before the negotiations were
finalized, Bill Clinton came into office in the U.S. and Kim Campbell in Canada, and
before the agreement became law, Jean Chrtien had taken office in Canada. The
proposed Canada-U.S. trade agreement had been very controversial and divisive in
Canada, and the1988 Canadian election was fought almost exclusively on that issue.
In that election, more Canadians voted for anti-free trade parties (the Liberals and
the New Democrats) but the split caused more seats in parliament to be won by the
pro-free trade Progressive Conservatives(PCs). Mulroney and the PCs had a
parliamentary majority and were easily able to pass the Canada-US FTA and NAFTA
bills. However, Mulroney himself had become deeply unpopular and resigned on June
25, 1993. He was replaced as Conservative leader and prime minister by Kim
Campbell. Campbell led the PC party intothe1993 election where they were

decimated by the Liberal Party under Jean Chrtien, who had campaigned on a
promise to renegotiate or abrogate NAFTA; however, Chrtien subsequently
negotiated two supplemental agreements with the new US president. In the US,
Bush, who had worked to "fast track" the signing prior to the end of his term, ran out
of time and had to pass the required ratification and signing into law to incoming
president Bill Clinton. Prior to sending it to the United States Senate, Clinton
introduced clauses to protect
In the area of intellectual property, the North American Free Trade Agreement
Implementation Act made some changes to the Copyright law of the United States,
foreshadowing the Uruguay Round Agreements Act of 1994 by restoring copyright
(within NAFTA) on certain motion pictures which had entered the public domain.

PROTECTION FOR IMPORT-SENSITIVE PRODUCTS


Under the General Agreement on Tariffs and Trade (Article XIX), and the U.S.Canada Free Trade Agreement (Chapter 11), countries may take emergency
action if increased imports cause injury to domestic producers. This concept
was carried over into the NAFTA.
NAFTA permits, under specified conditions, the parties to impose a temporary,
emergency safeguard measure that is, an increase in the tariff to the
prevailing MFN level - in the event imports cause, or threaten to cause,
serious injury to domestic producers. In 2008, a NAFTA partner could,
assuming the associated conditions are satisfied, invoke a Chapter 8
safeguard provision until 1 year following full implementation of the NAFTA
commitments, i.e., until January 1, 2009. Beyond January 1, 2009, the NAFTA
Partner could maintain a safeguard arrangement only with the consent of the
Party against whose good the action would be taken.

NAFTA: The Problems


It has been said that, "for a nation to prosper in the 21st century, it must be
an active participant in the global economy and an open market for the
world's goods. But with the lowering of trade restrictions comes economic
hardship for some working Americans."

Economic hardship and concomitant anxiety because NAFTA engenders a


feeling among some people that "the U.S. is losing control over its economic
destiny. NAFTA joined a big Third World country to the U.S. at a time when
many Americans were losing their jobs and factories heading south of the
border already. At the same time, companies that have been forced by U.S.
environmental rules to spend millions on cleanup worry about competing with
Mexico, with its hit or miss environmental regulations." All of these
uncertainties, coupled with defense downsizing and economic restructuring
accompanying the end of the cold war, exacerbates such potential economic
hardships as worker displacement, the loss of jobs, the elimination of entire
industries, as well as the environmental differences between the countries.

Problems Affecting Employment


At the root of NAFTA's potential negative impact on U.S. employment is the
disparate wage rates between the U.S. and Mexico. Wages in Mexico are as
low as U.S. 57 cents per hour for unskilled labor and an average of U.S. $3.80
per hour for skilled labor. Given these relatively low wages compared to U.S.
standards, there is concern that jobs may flood to Mexico as the result of
NAFTA and cause the following problems:

Worker Displacement - Displacement occurs when a worker must acquire


different, enhanced, or new skills in order to maintain a present job, or must
secure a different job in his or her company. This may require retraining,
sometimes at the worker's expense, extended periods of time between jobs,
and possibly entering the new job at a level lower than the worker occupied
at the previous job.
Loss of Job - Job loss occurs when the employer is unable to compete in the
international marketplace or enhances plant and equipment to compete more
effectively, thereby necessitating fewer employees for the same productive
operations. In short, the employee is discharged from the enterprise. This
scenario may occur in those firms and industries that are labor intensive
rather than capital intensive. Labor intensive enterprises may experience
increasing difficulty competing against the relatively lower Mexican wage
rates. Given this generalization, it is reasonable to conclude that firms in such
labor-intensive industries as furniture, glass products, shoes, and textiles may
experience loss of jobs to Mexico, while such capital intensive industries as
chemicals, plastics, metals, pharmaceuticals, and telecommunications may
be expected to fare well in the NAFTA era.

Loss of Industry - Industry loss occurs when firms are unable to compete
with foreign competitors because of the lower cost structures of those
competitors. In such situations, management may decide to close a firm or to
relocate it from its home country to a foreign country and consider the
investment in plant and equipment in the home country a sunk cost to be
abandoned. That decision is made easier when the wage rates are lower in
the foreign country; when health care cost and pensions are lower; the cost of
capital is low; the foreign government provides a welcoming environment that
may include favorable tax treatment or government arranged financing; the
labor force in the foreign country is attractive, eager to work, well educated,
or amenable to training; the foreign country offers a pleasant climate and an
improving infrastructure; the foreign country's political and economic
structures are stable; and the foreign country offers access, as in the case of
Mexico, to a large and unsaturated market, and from Mexico, a gateway to
the rest of Latin America. All of these things encourage the loss of industry
and are the very real concerns for workers and unions in the United States.
Overlaid on the factors affecting employment are the effects of firm size and
firm location. The smaller and the less advanced technologically a business,
the less is its ability to compete in the NAFTA world. Likewise, geographic
location may affect an enterprise's ability to compete under NAFTA. 19 An
assessment by the International Trade Commission found that the states in
the U.S. southwest would benefit the most from NAFTA, while the Midwest,
the south, and parts of the west might experience economic disruption in the
short run.20 This conclusion is supported by a Economic Policy Institute study
predicting significant job losses in the Midwest. The state of Ohio, for
example, is predicted to lose 406,667 jobs, 9.3% of jobs in the state, due to
NAFTA.

Problems Concerning The Environment


During the NAFTA debate, the U.S./Mexican border was called a "twothousand mile Love Canal" because of the horrendous environmental
conditions in the maquiladoras industrial zone along the border. There, open
burning, open sewers, industrial runoff, and toxic dumping are the rule rather
than the exception. Concomitant with these environmental abuses is the
reported use of outdated technologies by the Mexican electric power industry
in order to contain cost.
The lax environmental conditions along the U.S./Mexican border, coupled with
lax environmental standards throughout Mexico, stimulated U.S.

environmental groups to seek legal redress against NAFTA. 24 The result was
a court order in June 1993 requiring the U.S. government to file an
environmental impact statement on the potential effects of NAFTA. 25 The
order was appealed by the Clinton administration on grounds of the
environmental groups' legal standing to file the suite and on grounds that the
ruling was an unconstitutional interference with the authority of the President.
In reply, a U.S. Circuit Court of Appeals ruled that the NAFTA agreement was a
Presidential action not reviewable by the courts, thereby voiding the order for
an environmental impact statement and enabling the eventual passage of
NAFTA.

NAFTA - The Promise


There is much that has been and is yet to be written about the promise of
NAFTA. Hyperbolic may be a word to describe the arguments for and against
NAFTA prior to its passage. Arguments that were reminiscent of the debate
surrounding the formation of the European Community. That debate is as yet
ongoing in Europe. Arguably, even with the passage of NAFTA, the debate is
still ongoing in the United States, especially given the recent economic and
political problems in Mexico.

Increase In Jobs/Growth Of Industries


The strongest, if not the most histrionic, hyperbole in the NAFTA debate was
the issue of the potential loss of jobs and industries due to NAFTA. Some jobs
have been lost and will undoubtedly be lost because of NAFTA in both the U.S.
and Mexico, particularly in labour-intensive industries. But, on balance, NAFTA
is expected to produce a net gain in jobs.
One of the better analyses of the impact of NAFTA on U.S. industry is a study
by Fortune magazine. That study presents a forecast for twelve U.S. industries
following the passage of NAFTA and predicts an increase in exports by all
twelve industries. An increase in exports may be expected to bring an
increase in jobs because "trade is a positive-sum game in which all parties
stand to gain, and there is no natural limit to the number of jobs that can be
created by it." This does not, however, imply that there will be no loss of jobs
in some companies and in some industries as the result of NAFTA.

Stability And Growth In Mexico

Passage of NAFTA was important for Mexico. It facilitated the continuation of


economic and political reforms in Mexico. It was "America's best assurance
that its large neighbour to the south will continue to develop into a stable and
prosperous nation."
But, what would have happened to Mexico if NAFTA had not been adopted?
Scenarios included a potential collapse of the Mexican economy, a reversal of
economic and structural reforms, a run on the Mexican currency, a drying up
of foreign investment in Mexico, and a nationalist backlash by the people of
Mexico. Castaneda discounts the seriousness of these scenarios and suggests
that the only downside to a defeat of NAFTA would have been damage to the
prestige of former Mexican President Salinas. Interestingly, while NAFTA was
passed, it has not prevented the recent damage to Salinas' prestige. Now, the
new Mexican President, Ernesto Zedillo Ponce de Leon, needs a successful
NAFTA to persuade voters that the pain of Salinas' economic reform program
will have a payoff.

Protect And Stimulate U.S. Investment

Passage of NAFTA was important for the United States because U.S. firms had
significant investments in Mexico. In August 1993, U.S. firms invested $615
million in Mexico; 72% of all foreign investment that month. In total, foreign
investment in Mexico from 1989 through August 1993 was $33.09 billion, of
which an estimated $24 billion was by U.S. firms. The passage of NAFTA
protected this investment, is expected to stimulate additional U.S. investment
in Mexico, to provide additional markets for U.S. products, to increase jobs,
and to enhance the standards of living in both the U.S. and Mexico.
Success with NAFTA will stimulate further investment in Mexico and provide a
doorway to the rest of Latin America. That doorway may open toward an even
larger trade agreement in the Americas, foreshadowing the mega-trading
blocs that are likely to emerge throughout the world in the 21st century.
Theorists refer to a "triad concept" of the Americas, the Asia Pacific region,
and Europe forming trading groups of the future.

OTHER KEY NAFTA PROVISIONS


Sanitary and Phytosanitary Measures: The NAFTA imposes disciplines on the
development, adoption, and enforcement of sanitary and phytosanitary (SPS)
measures. These are measures taken to protect human, animal, or plant life or
health from risks that may arise from animal or plant pests or diseases, or from food
additives or contaminants. Disciplines contained in NAFTA are designed to prevent
the use of SPS measures as disguised restrictions on trade, while still safeguarding
each country's right to protect consumers from unsafe products, or to protect
domestic crops and livestock from the introduction of imported pests and diseases.
NAFTA included various provisions covering investment flows, financial services,
government purchases, and protection of intellectual property rights. For example,
NAFTA removed many investment barriers and included clauses protecting the rights
of direct investors.
NAFTAs financial services provisions covered banking, insurance, and securities
industries and provided the right of establishment in these industries, subject to
some exceptions. Government procurement provisions of NAFTA eliminated Buy
National restrictions on the majority of nondefense goods and services that were
supplied by firms in North America to the federal and state governments of the
member countries. In addition, NAFTA established comprehensive standards for the
protection and enforcement of intellectual property rights in the member countries.
Although NAFTA encourages trading partners to adopt international and regional
standards, the agreement explicitly recognizes each country's right to determine the
necessary level of protection. Such flexibility permits each country to set more
stringent standards, as long as they are scientifically based. NAFTA also allows state
and local governments to enact standards more stringent than those adopted at the
national level, so long as these standards are scientifically defensible and are
administered in a forthright, expeditious manner.
1.Export Subsidies: The three NAFTA countries work toward the elimination of
export subsidies worldwide. The United States and Canada are allowed under the
NAFTA to provide export subsidies into the Mexican market, under certain conditions,
to counter subsidized exports from other countries. Neither Canada nor the United
States is allowed to use direct export subsidies for agricultural products being sold to
the other, and both countries are required to consider the export interests of the
other whenever subsidizing agricultural exports to third countries.

2. Internal Support: Under NAFTA, the parties should endeavour to move toward
domestic support policies that have minimal trade or production distorting effects, or
toward policies exempt from domestic support reduction commitments under the
World Trade Organization.

3.Grade and Quality Standards: The United States and Mexico agreed that when
either country applies a measure regarding the classification, grading, or marketing
of a domestic product destined for processing, it will provide no less favourable
treatment for like products imported for processing.

COMMITTEE HELP IMPLEMNTATION


The NAFTA Committee on Agricultural Trade monitors and promotes cooperation on
the implementation and administration of the agricultural provisions. The committee
provides a forum for the three countries to consult on trade issues and other matters
related to the implementation of the agreement.
Meetings at the officials level were held on April 30, 1996 in Washington and June
18, 1996 in Ottawa. A detailed term of reference and work plan for 1996/97 was
agreed upon. The first meeting of the Advisory Committee, which will include
industry representatives from each of the parties, is scheduled for February 1997.
The Working Group met on June 18, 1996 in Ottawa. The meeting provided an
opportunity for the parties to examine and identify ways to implement the Group's
mandate to work toward the elimination of all export subsidies affecting agricultural
trade between the parties. In this regard the parties have agreed to a joint work plan
for 1996/97 based upon cooperative research and the possibility of coordination of
positions in international for. The NAFTA Committee on Sanitary and Phytosanitary
(SPS) Measures promotes the harmonization and equivalence of SPS measures, and
facilitates technical cooperation, including consultations regarding disputes involving
SPS measures. This committee meets periodically to review and resolve issues in the
SPS area. The Pesticides Technical Working Group (TWG) was established in 1995
under Article 722 of NAFTA to address pesticide issues among Mexico, Canada and
the United States. Although the primary reporting of the Pesticides TWG is to the SPS
Committee, it could report to the NAFTA Committee on Standards-Related Measures
for pesticide issues relating to that Committee. The inaugural meeting was held
March 27-29, 1996, in Washington.
The meeting provided an opportunity for the Parties to discuss the ongoing
harmonization work on scientific and policy considerations for pesticide regulation,
for example, the harmonization of MRLs and the pesticide registration activities. The
next meeting is scheduled for November 1996 in Ottawa. In the upcoming year, the
NAFTA Committee on Sanitary and Phytosanitary Measures will focus on facilitating
activities which should lead to a decrease in the number of potential trade irritants.
The Committee will undertake to identify future areas for harmonization and areas
where equivalency could be recognized. Priority will be given to the harmonization of
tolerances for pesticides and for food additives, pesticide registration procedures and
veterinary drug residue levels. The relationship between the SPS Committee and the
existing bilateral and trilateral Working Groups will be formalized. The SPS
Committee will consider the issue of trade in genetically modified material. The SPS

Committee will continue to exchange information and to provide a forum for the
discussion of bilateral issues.
The NAFTA Advisory Committee on Private Commercial Disputes Regarding
Agricultural Goods provides recommendations to the three governments for
resolving private commercial disputes that arise in connection with transactions in
agricultural products. The intent is to achieve prompt and effective resolution of
commercial disputes, with special attention to perishable items. The committee is
composed primarily of private sector representatives but also has government
participants. Lastly, bilaterally, the United States maintains annual meetings with
both countries called the Consultative Committee on Agriculture (CCA). The CCA
meeting is used by both countries to ensure the full and proper implementation of
the NAFTA. NAFTA requires the Advisory Committee on Private Commercial Disputes
(Committee) to report and provide recommendations to the NAFTA Commission on
general issues referred to it by the Commission respecting the availability, use and
effectiveness of arbitration and other procedures for the resolution of private
international commercial disputes in the free trade area.

EXPORT SUBSIDY RULES OF ORIGIN


NAFTA improves incentives for buying within the North American region and ensures
that North American producers receive the primary benefits of all newly established
tariff preferences. Goods not originating from the United States, Mexico, or Canada
must be significantly transformed or processed in one of those countries before they
receive NAFTA's lower duties for shipment to one of the two other countries.
The NAFTA rules of origin for agricultural products were constructed to prevent
Mexico from becoming an export platform for processed products made from
subsidized raw materials originating in non-NAFTA countries. There are also strong
rules of origin for U.S. import-sensitive commodities, such as citrus and dairy items.
Bulk Commodities: All bulk agricultural commodities, and certain processed products
such as orange juice and cheese, are exempt from the minims provision, which
otherwise allows up to 7 percent of non-NAFTA-origin product to be included in final
NAFTA goods.

Citrus: All single-fruit juices (fresh, frozen, concentrated, reconstituted, fortified)


must be made from100-percent NAFTA-origin fresh citrus fruit
.
Dairy Products: Only U.S. or Mexican milk or milk products can be used to make
cream, butter, cheese, yogurt, ice cream, or milk-based drinks traded under NAFTA
preferential rates. The deminimise provision does not apply to any citrus products.

Vegetable Oil: With the exception of certain industrial fatty acids and acid oils,
refining of crude oils with in a NAFTA country does not confer NAFTA origin. Making
margarine and hydrogenated oils from imported crude oils does not confer origin.
Sugar: Refining does not confer origin. In order for sugar to be considered of North
American origin, all processing of sugarcane or sugar beets must take place in NAFTA
territory.
Peanut Product: Mexico must produce the peanuts to qualify for NAFTA preferential
rates on peanuts and peanut products exported to the United States. U.S. exports of
peanut products to Mexico are subject to this same rule.
A good shall originate in the territory of a Party where:
a) The good is wholly obtained or produced entirely in the territory of one or more of
the Parties, as defined in Article 415;
b) each of the non-originating materials used in the production of the good
undergoes an applicable change in tariff classification set out in Annex 401 as a
result of production occurring entirely in the territory of one or more of the Parties, or
the good otherwise satisfies the applicable requirements of that Annex where no
change in tariff classification is required, and the good satisfies all other applicable
requirements of this Chapter;
c) The good is produced entirely in the territory of one or more of the Parties
exclusively from originating materials; or
d) except for a good provided for in Chapters 61 through 63 of the Harmonized
System, the good is produced entirely in the territory of one or more of the Parties
but one or more of the non-originating materials provided for as parts under the
Harmonized System that are used in the production of the good does not undergo a
change in tariff classification because i. the good was imported into the territory of a
Party in an unassembled or a disassembled form but was classified as an assembled
good pursuant to General Rule of Interpretation of the Harmonized System, or ii. the
heading for the good provides for and specifically describes both the good itself and
its parts and is not further subdivided into subheadings, or the subheading for the
good provides for and specifically describes both the good itself and its parts,
provided that the regional value content of the good, determined in accordance with
Article 402, is not less than 60 percent where the transaction value method is used,
or is not less than 50 percent where the net cost method is used, and that the good
satisfies all other applicable requirements.

ADVANTAGES OF NAFTA

NAFTA Reduced Tariffs


A tariff is the tax placed by the national government on an exported or
imported service or good to discourage or encourage trade. The reduced
trade restrictions introduced by NAFTA enabled the Americans easy
purchasing of Mexican and Canadian goods. Particularly, the United States
acquires much of its vehicles, gold, crude oil and machinery from the two
countries. This is along with its fresh products, red meat, live animals, snack
foods, and frozen and chilled foods.
The Three Countries Take Advantage of Real Income Increases
Based on the article of Washington Post, a study conducted by three
economists of Federal Reserve demonstrated that NAFTA boosted incomes
within the United States by 0.17 percent, in Mexico by 1.3 percent and in
Canada by 0.96 percent.
Increased Of Trade Between, Canada, Mexico and the United States
NAFTA has been recognized for hugely increasing trade between Canada,
Mexico and the United States. Trade of services and goods between these
three countries has elevated from $337 billion during the year 1993 up to
$1.182 trillion during the year 2011.
Provided More Employment Opportunities for the US Workers
Based on the Chamber of Commerce of the United States, the increased trade
because of NAFTA supports nearly five million jobs in the United States alone.

DISADVANTAGES OF NAFTA
Less Benefit to Mexican Workers Than Expected
Though NAFTA encouraged huge US investments within Mexico, much of it
has been used to establish factories in which Mexican workers offer cheap
employment to make US goods. The agreement has failed in its aim of

increasing the middle class size of Mexico since Asian labour proves to be
more affordable.
Increased Tariffs yet Not Regulations
NAFTA might have removed tariffs between the three nations, yet it did not do
away with the number of customs regulation which might stifle trade. Origin
regulations rule decide if a good is qualified for trade under the guidelines of
NAFTA, while exporters should accomplish origin certificate paperwork. In
simple words, even with less or no tariffs, still there are a number of
government-imposed obstructions to trade.
By weighing properly the advantages and disadvantages of NAFTA, you
should have a better insight of where you should stand. The information
mentioned above should be helpful.

SWOT OF NAFTA

TRADE BLOCS AND COMMON MARKETS


A trade bloc is an agreement where regional barriers to trade are reduced or

eliminated among the participating states.


KEY POINTS
o
Trade blocs can be stand-alone agreements between
several states, such as the North American Free Trade Agreement (NAFTA) or
part of a regional organization, such as the European Union.
o
A single market is a type of trade bloc that is composed of a free
trade area for goods, with common policies on product regulation, as well as
freedom of movement on capital, labor, enterprise, and services.
o
A common market is a first stage towards a single market, and
may be limited initially to a free trade area with relatively free movement of
capital and of services, but not so advanced in reduction of the rest of the
trade barriers.

TERMS

Common market
A common market is a first stage towards a single market, and may be limited
initially to a free trade area with relatively free movement of capital and of
services, but not so advanced in reduction of the rest of the trade barriers.

North American Free Trade Agreement (NAFTA)


An agreement signed by the governments of Canada, Mexico, and the United
States, creating a trilateral trade bloc in North America. It came into force in
1994.

trade bloc
A trade bloc is a type of intergovernmental agreement, often part of a
regional intergovernmental organization, where regional barriers to trade,
(tariffs and non-tariff barriers) are reduced or eliminated among the
participating states.

EXAMPLE

The North American Free Trade Agreement (NAFTA) is an example


of a formal trade bloc. Canada, the United States, and Mexico grant each
other special privileges by not imposing tariffs. Accordingly, the common

market of which Canada, the United States, and Mexico are all members
facilitates trade among the countries.

A trade bloc is a type of intergovernmental agreement, often part of a


regional intergovernmental organization, where regional barriers to
trade are reduced or eliminated among the participating states. Trade
blocs can be stand-alone agreements between several states, such as
the North American Free Trade Agreement (NAFTA) or part of a regional
organization, such as the European Union.
A single market is a type of trade bloc that is composed of a free trade
area for goods, with common policies on product regulation, as well as
freedom of movement on capital, labor, enterprise, and services.
According to the principles of capitalism, a single market has many
benefits. With full freedom of movement for all the factors
of production between the member countries, the factors of production
become more efficiently allocated, further increasing productivity.
However, entering a trade bloc also strengthens ties between member
parties. In so doing, member parties not only share each others'
strengths but also each others' weaknesses.
Economist Jeffrey J. Scott argues that for a trade bloc to be successful,
members must share four common traits: similar levels of per capita
national income, geographic proximity, similar or compatible trading
regimes, and a political commitment to regional organization. For better
or for worse, trade blocs are prevalent. Since 1997, more than 50% of
all world commerce was conducted under the auspices of regional trade
blocs, such as NAFTA.

India Inc. Comes Together to Celebrate 20 years of NAFTA


at MICE North America Show
2014 marks 20 years since the North America Free Trade Agreement
(NAFTA) came into force. As part of the MICE North America Show
(conceptualised by Visit-USA Committee (VUSACOM) India Chapter &
organised by Travel Biz Monitor) held on June 20 in Mumbai, the USIndia Investors' Forum (USIIF), VUSACOM & the US Commercial Service
held a discussion with India's corporate sector on doing business with
NAFTA countriesUSA, Canada & Mexico. Travel Biz Monitor presents a
summary
The first-of-its kind B2B MICE North America Show, which highlighted
the prowess of USA, Canada and Mexico as MICE destinations through
day-long focused meetings between decision-makers from corporate
sector and embassy officials, hotels, airlines, major tour operators,

attractions, etc. culminated with a gala function to celebrate 20 years of


NAFTA. Supported by the US Commercial Service, Canada Trade
Commission and Mexican Trade Commission, the event, which
witnessed a large gathering of high-profile members from the corporate
world, comprised a panel discussion and networking over cocktails
sponsored by Brand USA.

The function kick started with a vote of thanks by Camille Richardson,


Principal Commercial Officer, US and Foreign Commercial Service,
Mumbai, India, to the US High Commission and Manoj Gursahani,
President, VUSACOM India Chapter, who she said was wearing two hats
tonight, that of Vice Chairman of USIIF and President of VUSACOM
India Chapter. She also extended thanks to JW Marriott Mumbai for
hosting the event. Sharing a bit about the history of the landmark
agreement, Richardson said that diplomatic negotiations for NAFTA had
begun in 1986, and the agreement was finally signed on December 17,
1992 by then US President, George H W Bush; then Canadian Prime
Minister, Brian Mulroney; and then Mexican President, Carlos Salinas, in
San Antonio, Texas. The Agreement took effect on January 1, 1994.

The purpose of NAFTA, stated Richardson, was to create a new


economic order by eliminating barriers to trade and investment, and by
facilitating cross-border movement of goods and services among the
three participating countries. As of 2008, duties and quantitative
restrictions were totally lifted, she said. This trade bloc has the largest
GDP in the world with respect to combined purchasing power parity, she
stated.
Corporate Brainstorming
The panellists for the evening were Dr Bharat Singh, Chairman, SBRC
(Services Business Review Council), Aditya Birla Group and Chairman,
USIIF; Harish Laxman, Managing Director, Rane TRW Steering Systems
and Chairman, Automotive Components Manufacturers Association of
India (ACMA); and Ameet Nivsarkar, Vice President, Tata Consultancy
Services. The discussion was moderated by Sasi Kumar, Executive
Director, Ernst & Young India.

Citing the example of Aditya Birlas company, Hindalco Industries Ltd.,


Dr Singh said, Hindalco honed in on Novelis and acquired 100 per
cent for a whopping USD 6.25 billion. Within two years, its revenue went
up to USD eight or nine billion, and today it is USD 12 billion. At a time
when very few companies were putting money back into business, we
were almost breaking path.
As to why Hindalco chose the NAFTA region, Dr Singh said, NAFTA is
the worlds biggest and richest market, it is eco-friendly, it is as diverse
as India and has English-speaking people.
Laxman gave statistics about automotive trade between NAFTA and
India. The Indian auto-component industry is a USD 40-billion one, out
of which export is USD 9.7 billion. Out of the USD 9.7 billion, 23 per cent
is to the NAFTA region, which has the largest share. Exports to NAFTA is
USD 2.2 billion, and imports from NAFTA is USD 831 billion, he stated.
Clearly we have just started dating, but, although we have a long way
to go, NAFTA is one of the most exciting export markets, especially from
an SME viewpoint. In the last five years or so, the CAGR has been
upwards of 30 per cent. Economic pressure is making people in the
NAFTA region look for low-cost solutions, and India is able to capitalise
on that, Laxman pointed out.

Speaking about the IT sector and how NAFTA has been opening up
opportunities, Nivsarkar said, NAFTA offers larger markets and
economies of scale, and therefore, because of lower costs,
opportunities for plough-back into R&D. He went on to say, Although
trade agreements are mainly written from a goods point of view, they
help the services sector too. After the opening up of the Indian economy
in the 1990s, countries were able to embrace the Indian services sector
easily. In fact, it was this that led to the explosion in the IT sector.
Today, 60 per cent of TCSs revenues come from North America. This is
itself an indicator of the ease of doing business there.
On how he perceives Indias competitiveness in the NAFTA region, in the
manufacturing sector and services, Dr Singh said that in the end of
2010, the US started bringing jobs that were outsourced back to the
country. In the manufacturing sector, the availability of opportunities in
the US and Canada is huge, he said.
As far as green field investment is concerned, Mexico offers excellent
opportunities. Labour is very efficient, with very little supervision
required, and great adherence to training. In Mexico, if a business is
down for six months, it will be up for sale, Dr Singh said.
R&D & Technology for Growth
Kumar then steered the discussion to experiences with R&D and
knowledge-collaboration between NAFTA and India. Laxman said that
there was fantastic technology in North America, and that the region
has been able to bifurcate between high-end value-add, medium and
lower-end. There is a lot of technology exchange between India and

NAFTA. Today a lot of patents are getting created in India for the region,
as well, he stated.
Nivsarkar opined that there has been a growth wave in the US, Canada
and Mexico, and with the new government in India, opportunities should
continue to grow well here too. However, communication could be
better, he opined. Kumar corroborated that it is indeed important to
offer clear information on the progress made between India and NAFTA.
There is a lot of hope and opportunities for NAFTA and India to work
together in areas of investments and trade partnerships involving
knowledge, research and development, he said.
Closing Remarks
Richardson, Rodrigo Blanco, Trade and Investment, India, Sri Lanka,
Maldives Bangladesh & Nepal, Mexican Trade Commission Office and
Nicolas Lepage, Consul and Senior Trade Commissioner at Consulate
General of Canada in Mumbai addressed the gathering individually to
conclude the formal part of the evening. Richardson thanked the
panellists for highlighting business opportunities in the NAFTA region,
and talked about the Select USA programme. Select USA will be
holding its Summit in March 2015, she informed.
Blanco pointed out that Mexico has a lot of business opportunities to
offer. We have a lot of collaborations with the US and Canada, he said.
Lepage noted that North America was a very large market and that
there was sizably combined GDP growth. US, Canada and Mexico have
recovered from the last crisis. It makes sense for companies to look at
North America. Goods and services are flowing between our countries,
he stated.
Kadambini Mittal, Regional Director, Global Sales, India & Subcontinent,
Marriott Hotels India Pvt. Ltd. said that hotels have seen huge growth
due to the MICE segment, and that the growth rate for the USA is 26 per
cent. Sheema Vohra, President, Sartha Marketing, which represents
Brand USA in India showed a short video highlighting USA as a
destination and reiterated how MICE is an important segment for USA.
She said that she is very positive about growth in tourist numbers and
MICE traffic from India to USA. Gursahani gave the final vote of thanks
to conclude the event.

OBJECTIVES OF THE STUDY

Questionnaire.
Gain practical as well as the theoretical knowledge about the subject.

CONCLUSION
NAFTA and the formation of other trading blocs around the world
represent a paradigm shift in the way nations relate to each other

through trade -- a paradigm shift that recognizes the emergence of


trade alliances in the global marketplace. It is a shift that cannot be
ignored. The world is an interdependent place and agreements such as
NAFTA will have economic, political, and social consequences of a scale
not heretofore experienced.
By clearing the way for increased trade and investment among Canada,
Mexico, and the United States, NAFTA is enabling agricultural producers and
consumers throughout North America to benefit more fully from their relative
strengths and to respond more efficiently to changing economic conditions.
Each NAFTA country has taken part in the expanded agricultural trade and
foreign direct investment fostered by the agreement. Moreover, the
agreement has been accompanied by substantial improvements in the North
American transportation system and in the institutional capacity of the NAFTA
governments to facilitate agricultural trade, resolve trade disputes, and
cooperate on environmental issues. Together, these developments are
resulting in a more prosperous, more integrated North American economy.