North American Free Trade Agreement INTRODUCTION

NAFTA is short for the North American Free Trade Agreement. NAFTA covers Canada, the U.S. and Mexico making it the world’s largest free trade area in terms of GDP. As of January 1, 2008, all tariffs between the three countries have have been eliminated. Between 1993-2007, trade tripled from $297 billion to $930 billion. The North American Free Trade Agreement or NAFTA , French is an agreement signed by the governments of the United States, Canada, andMexico 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 It superseded the Canada-United States Free Trade Agreement between the U.S. and Canada.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 purchasing power parity GDP of its members, as of 2007 the trade block is the largest in the world and second largest by nominal GDP comparison. The North American Free Trade Agreement (NAFTA) has two supplements, the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC).

NAFTA's naming
American intellectual Noam Chomsky has argued that the only true words in the phrase "North American Free Trade Agreement" seem to be "North America", as what is called trade is in reality mostly restricted intra-corporate transfers of products and services. Agreement is lacking as NAFTA was passed with a lack of democratic oversight protocols and widespread public opposition. Adam Smith, states in The Wealth of Nations that free trade includes the labor component as a factor of production:
"By obstructing the free circulation of labour and stock both from employment to employment, and from place to place, occasions in some cases a very inconvenient inequality in the whole of the advantages and disadvantages of their different employments."

Within NAFTA official law and agreements the movement of labor is temporary and very restrictive, especially for unskilled workers.Mexican (legal and illegal) migration to the USA is surging, but not due to NAFTA provisions. NAFTA provisions for freedom of movement of workers are very restrictive compared to one of the economic freedoms of the European Union, the freedom of movement for workers.

When Was NAFTA Started?

North American Free Trade Agreement
NAFTA was signed by U.S. President George H.W. Bush, Mexican President Salinas, and Canadian Prime Minister Brian Mulroney in 1992. It was ratified by the legislatures of the three countries in 1993. The U.S. House approved it by 234 to 200 on November 17 and the Senate by 60 to 38 on November 20. It was signed into law by President Bill Clinton on December 8, 1993 and entered force January 1,1994. Although it was started by President Bush, it was a priority of President Clinton's, and its passage is considered one of his first successes. (Source:, NAFTA Signed into Law, December 8, 1993.

How Was NAFTA Started?
The impetus for NAFTA actually began with President Ronald Regan, who campaigned on a North American common market. In 1984, Congress passed the Trade and Tariff Act. This is important because it gave the President "fast-track" authority to negotiate free trade agreements, while while only allowing Congress the ability to approve or disapprove, not change negotiating points. Canadian Prime Minister Mulroney agrees with Reagan to begin negotiations for the Canada-U.S. Free Trade Agreement, which was signed in 1988, went into effect in 1989 and is now suspended due to NAFTA. (Source: NaFina, NAFTA Timeline) Meanwhile, Mexican President Salinas and President Bush began negotiations for a liberalized trade between the two countries. Prior to NAFTA, Mexican tariffs on U.S. imports were 250% higher than U.S. tariffs on Mexican imports. In 1991, Canada requests a trilateral agreement, which then led to NAFTA. In 1993, concerns about liberalization of labor and environmental regulations led to the adoption of two addendums to NAFTA.


North American Free Trade Agreement Why Was NAFTA Formed?
Article 102 of the NAFTA agreement outlines its purpose: Grant the signatories Most Favored Nation status. Eliminate barriers to trade and facilitate the cross-border movement of goods and services. Promote conditions of fair competition. Increase investment opportunities. Provide protection and enforcement of intellectual property rights. Create procedures for the resolution of trade disputes. Establish a framework for further trilateral, regional and multilateral cooperation to expand NAFTA's benefits.


The American government then entered into negotiations with the Mexican government for a similar treaty. Before the negotiations were finalized. Democratic president. The proposed Canada-U.S. and the Maastricht Treaty which created theEuropean Union was signed in 1992. Chrétien had campaigned on a promise to renegotiate or abrogate NAFTA. 1993. who then led the PC party into the 1993 election where they were decimated by the Liberals under Jean Chrétien. Mulroney and the PCs had a parliamentary majority and were able to easily pass the Canada-U. In that election more Canadians voted for anti-free trade parties (the Liberals and the New Democrats) but more seats in parliament were won by the profree trade Progressive Conservatives (PCs). 4|Page . The international climate at the time favoured expanding trade blocs. Bill Clinton. FTA and NAFTA bills.W. Jean Chrétien had taken office in Canada. Canadian Prime Minister Brian Mulroney and Mexican President Carlos Salinas. However Mulroney himself had become deeply unpopular and resigned on June 25. ceremonially signed it. and ideological ally. U.S. 1992. Bush. but instead negotiated the two supplemental agreements with the new U. Texas. the leaders met in San Antonio.S.S. He was replaced as Conservative leader and prime minister by Kim Campbell. and the 1988 Canadian election was fought almost exclusively on that issue. and Kim Campbell in Canada. Following diplomatic negotiations dating back to 1991 between the three nations. The agreement then needed to be ratified by each nation's legislative or parliamentary branch. President George H.North American Free Trade Agreement Background In 1988 Canada and the United States signed the Canada-United States Free Trade Agreement. and Canada asked to join the negotiations in order to preserve its perceived gains under the 1988 deal. each responsible for spearheading and promoting the agreement. on December 17. to sign NAFTA.S. Bill Clinton came into office in the agreement had been extremely controversial and divisive in Canada. and before the agreement became law.

5% a year.S.U. the U. linking 439 million people and producing $15. what its purpose was and how large it is today. Estimates are that NAFTA will increase U. and Mexico making it the world’s largest free trade area in terms of GDP. History of NAFTA NAFTA is short for the North American Free Trade Agreement.Exports from Canada and Mexico to the U.S. GDP by as much as .North American Free Trade Agreement Facts About NAFTA 1. It also protect intellectual properties. 5|Page .NAFTA provides the ability for firms in member countries to bid on government contracts.S. GDP by between . NAFTA created the world’s largest free trade area. Estimates are that NAFTA increases U. Three U.3 trillion in goods and services annually. from $142 billion to $364. and how NAFTA specifically supported this increase in trade. Presidents were involved in creating it over a decade.5%.. Advantages of NAFTA NAFTA created the world’s largest free trade area. Find out how it was created.S. Find out what industries benefited. from $151 billion in to $501 billion. goods exports to Canada and Mexico grew 157%. 2.6 billion. from $297 billion in 1993 to $903 billion in 2007. from $297 billion in 1993 to $903 billion in 2007. by decreasing costs of imports.S. Elimination of tariffs also reduces inflation.1% . spurring business growth.3 trillion in goods and services annually. Increase in Trade: Trade between the NAFTA signatories tripled.S. NAFTA covers Canada. linking 439 million people and producing $15. grew 231%. Trade between the NAFTA signatories tripled. That's because its elimination of tariffs and agreements on international rights for business investors increases trade and capital. Specifically.

U. 6|Page . soybeans and oils. GDP is services. March 2008) Increase in Trade of Services: More than 40% of U. Increase in Foreign Direct Investment: Since NAFTA was enacted. latest data available). Mexico is the top export destination for beef. was $165 billion. services exports to Canada and Mexico grew 125%. It also guarantees they will receive fair market value for their investments in case the government decides to nationalize the industry or take the property by eminent domain. U. the percent of U. agricultural exports to Canada and Mexico has grown from 22% in 1993 to 30% in 2007. if needed. so being able to expand services to nearby countries is important. and the regulations aren't always apparent. apples and beans. including financial services and health care. (Source: USTR. soybean meal. corn sweeteners. foreign direct investment (FDI) in Canada and Mexico tripled to $331 billion (as of 2006.S. These aren't as easily transported as are goods.S. It is the second largest for corn.North American Free Trade Agreement Increase in U. Thanks to NAFTA. As a result of NAFTA. NAFTA requires authorities to use open administrative procedures and publish all regulations. Canadian and Mexican FDI in the U. NAFTA Facts.S. Services exports from Canada and Mexico grew to $37 billion.NAFTA reduces risk for investors by guaranteeing they will have the same legal rights as local investors.S. Service industries are often highly regulated. Agricultural Exports: NAFTA is especially helpful for agricultural exports because it reduces high Mexican tariffs. from $25 billion to $62 billion in 2006.S. NAFTA provides a legal mechanism for investors to make claims against a government. rice.NAFTA eliminates trade barriers in nearly all service sectors.S.

Wages: Employers in industries that could move to Mexico used that as a threat during union organizing drives. Those manufacturers that remained had to decrease wages to compete. Jobs: Since the cost of labor is cheaper in Mexico. allowing for exploitation. the U. 7|Page . who pay less for food. for a net loss of 879. Most of these jobs(78%) were in manufacturing. that rate had grown to 65%. Loss of U. Mexico's Farmers Are Being Put Out of Business: Thanks to the 2002 Farm Bill. Between 1993 and 1995. and how NAFTA contributed to these problems. computers.North American Free Trade Agreement 3.2% to 13. textiles. (Source: International Forum on Globalization.S. In contrast. as have Mexican farmers and its environment.S. Mexico decreased its subsidies to farmers from 33.S. These states had high concentrations of the industries that moved plants to Mexico.S. (Source: Economic Policy Institute.000 jobs. many manufacturing industries moved part of their production from high-cost U. Between 1994 and 2002. 2003) Lower U.S. November 17.2% of total farm much as 40% of net farm income. and electrical appliances. by 1999. thus suppressing wage growth. gaining only 794. manufacturers to move jobs to lower-cost Mexico. NAFTA allowed U.00. lost 1.S. These industries included motor vehicles. between 1990-2001. This benefits consumers. New York. As tariffs are removed. corn and other food is exported to Mexico below cost. Disadvantages of NAFTA NAFTA has been criticized for both displacing American workers and decreasing wage levels for those that remain. States hit hard included California. but makes it impossible for rural Mexican farmers to compete. Find out the facts behind these accusations. Most of those subsidies go to Mexico's large farms.7 million jobs. Michigan and Texas. Mexican workers have also suffered. NAFTA has many disadvantages. The High Cost of Free Trade. U. 50% of all companies used the threat. Many of Mexico's farmers were put out of business by U.-subsidized farm products. NAFTA provisions for Mexican labor and environmental protection were not strong enough. agribusiness is heavily subsidized . states.S.

workdays stretch out 12 hours or costing $36 billion per year in pollution. Regional Trade Agreements How does NAFTA fit within the context of other U. and if you are a woman. 4." according to Continental Social Alliance. 2003. Tariffs and Tortillas. U. Rural farmers have expanded into more marginal land. April 20. you could be forced to take a pregnancy test when applying for a job. (Source: Worldpress.North American Free Trade Agreement Exposing the Myth of Free Trade. The Economist. and MEFTI? 8|Page . owned companies employ Mexican workers near the border to cheaply assemble products for "export" to the U. FTAA. resulting in deforestation at a rate of 630. such as CAFTA.S. 2001) Degradation of Mexico's Environment Has Increased: In response to NAFTA competitive pressure. Mexico agribusiness has increased its use of fertilizers and other chemicals. regional trade agreements. in which U. January 24. February 25.S. These workers have "no labor rights or health protections.S. 2008) Maquiladora Workers Are Exploited: NAFTA caused an increase of the maquiladora program.000 hectares per year. Lessons of NAFTA. This now comprises 30% of Mexico's labor force.S.

Provisions The goal of NAFTA was to eliminate monkeys of trade and investment between the USA. on March 3. 1994. NAFTA also seeks to eliminate non-tariff trade barriers. brought the immediate elimination of tariffs on more than one half of US imports from Mexico and more than one third of US exports to Mexico.01 Chinese yuan. and vice versa. for some reason. The implementation of NAFTA on January 1. Within 10 years of the implementation of the agreement all US-Mexico tariffs would be eliminated except for some US agricultural exports to Mexico that were to be phased out in 15 years. so one Euro was worth $1. and 103. Canada and Mexico. 9|Page . a dollar was worth $.98 Canadian dollars. 7.52. For example.57 Japanese yen. The Euro is normally quoted in terms of its dollar value. 2008. Most US-Canada trade was already duty free.North American Free Trade Agreement What Are Exchange Rates? The dollar's exchange rate tells you how much a dollar is worth in a foreign currency.

There have been positive and negative outcomes from the NAFTA agreement.North American Free Trade Agreement NAFTA or North American Free Trade Agreement NAFTA covers Canada. and trademarks). The North America Free Trade Agreement. and Mexico making it the world's largest free trade area. Others argue that NAFTA has been beneficial to business owners and elites in all three countries. Some have suggested that in order to fully benefit from the agreement. Critics also argue that NAFTA has contributed to the rising levels of inequality in both the U. is a trade agreement between the United States. nor to substantially reduce poverty rates. Some argue that NAFTA has been positive for Mexico. even after accounting for the 1994–1995 economic crisis. Canada.S. From 1993 (the initiation of NAFTA) to 2005. also known as NAFTA. which has seen its poverty rates fall and real income rise. agribusiness. The treaty also protects intellectual property rights (patents. Some economists believe that NAFTA has not been enough to produce an economic convergence. and Mexico. and gradually phased out other tariffs over a 15-year period. trade increased from $297 billion to $810 billion. and outlines the removal of investment restrictions among the three countries. By 2008 almost all tariffs will have been eliminated. copyrights. Mexico must invest more in education and promote innovation in infrastructure and 10 | P a g e . NAFTA eliminated the majority of tariffs on products traded among the United States. but has had negative impacts on farmers in Mexico who saw food prices fall based on cheap imports from U. and Mexico. Canada.S.S. and Mexico. the U. and negative impacts on US workers in manufacturing and assembly industries who lost jobs.

11 | P a g e . NAFTA has not caused any trade diversion aside from the textiles and apparel industry. 1994: NAFTA was made as an expansion on the earlier USCanada trade agreement. 2006: Foreign officials were admitted into the US because of the NAFTA agreement. January 1. the United States signed the Security and Prosperity Partnership of North America. 2001: After the attacks on September 11. Free Trade Agreement. Overall. TIMELINE: 1988: Canada and the US signed the Canada-U.S. 2006: Canadian Government estimates that 24.219 Mexican citizens were present in Canada as "foreign workers".North American Free Trade Agreement agriculture.830 US citizens and 15. 2001: Mexico’s percentage of exports ousted its percentage of imports.

agribusiness.S. nor to substantially reduce poverty rates. have been quantified by several economists.North American Free Trade Agreement Effects NAFTA's effects. Critics also argue that NAFTA has contributed to the rising levels of inequality in both the U. which has seen itspoverty rates fall and real income rise (in the form of lower prices. Mexico must invest more in education and promote innovation in infrastructure and agriculture. and Mexico. 12 | P a g e . Some have suggested that in order to fully benefit from the agreement.S. especially food). Some argue that NAFTA has been positive for Mexico. both positive and negative. but has had negative impacts on farmers in Mexico who saw food prices fall based on cheap imports from U. Others argue that NAFTA has been beneficial to business owners and elites in all three countries. and negative impacts on U. even after accounting for the 1994–1995 economic crisis.S. whose findings have been reported in publications such as the World Bank's Lessons from NAFTA for Latin America and the Caribbean NAFTA's Impact on North America. Some economists believe that NAFTA has not been enough (or worked fast enough) to produce an economic convergence. workers in manufacturing and assembly industries who lost jobs. and NAFTA Revisited by the Institute for International Economics.

in whichrules of origin negotiated in the agreement were specifically designed to make U. aside from a few industries such as textiles and apparel. NAFTA has not caused trade diversion. Industry Maquiladoras (Mexican factories which take in imported raw materials and produce goods for export) have become the landmark of trade in Mexico. Ciudad Juárez. This has allowed for the rapid growth of non-border metropolitan areas. hence the debate over the loss of American jobs. 13 | P a g e .North American Free Trade Agreement Trade According to Issac (2005). and Reynosa. The main non-maquiladora industry that has suffered from NAFTA is the automobile industry. These are plants that moved to this region from the United States. firms prefer Mexican manufacturers. all three larger in population than Tijuana. such as Toluca. Leónand Puebla. Other sectors now benefit from the free trade agreement. and the share of exports from non-border states has increased in the last five years while the share of exports from maquiladora-border states has decreased. The World Bank also showed that the combined percentage growth of NAFTA imports was accompanied by an almost similar increase of non-NAFTA exports. overall.S.5% since the implementation of NAFTA in 1994. Hufbauer's (2005) book shows that income in the maquiladora sector has increased 15.

The CEC has held four symposia using this framework to evaluate the environmental impacts of NAFTA and has commissioned 47 papers on this subject. the CEC created a framework for conducting environmental analysis of NAFTA. in other cases. NAFTA's measures for investment protection. and the transportation equipment sector in the United States and Mexico. In response to this mandate. were unprepared for the increasing scale of production under trade liberalization. environmental policy was neglected in the wake of trade liberalization.[16] The most serious overall increases in pollution due to NAFTA were found in the base metals sector.North American Free Trade Agreement Environment Securing U. NAFTA did not inherently present a systemic threat to the North American environment. such as Chapter 11. 14 | P a g e . the first regional trade agreement between a developing country and two developed countries. the Mexican petroleum sector. but NAFTA-related environmental threats instead occurred in specific areas where government environmental policy. none of the initial hypotheses was confirmed. the CEC commissioned these papers from leading independent experts. one of the first ex post frameworks for the environmental assessment of trade liberalization. would have negative environmental impacts. The Clinton administration negotiated a side agreement on the environment with Canada and Mexico. infrastructure. To alleviate concerns that NAFTA. the CEC was given a mandate to conduct ongoing ex post environmental assessment of NAFTA. threatened to discourage more vigorous environmental policy. In some cases. and measures against non-tariff trade barriers.S. Overall. The framework was designed to produce a focused and systematic body of evidence with respect to the initial hypotheses about NAFTA and the environment. In keeping with the CEC’s overall strategy of transparency and public involvement. as was originally feared. such as the concern that NAFTA would create a “race to the bottom” in environmental regulation among the three countries. which led to the creation of the Commission for Environmental Cooperation (CEC) in 1994. or mechanisms. the North American Agreement on Environmental Cooperation (NAAEC). or the hope that NAFTA would pressure governments to increase their environmental protection mechanisms. congressional approval for NAFTA would have been impossible without addressing public concerns about NAFTA’s environmental impact. but not in Canada.

Zahniser & Coyle have also pointed out that corn prices in Mexico. have drastically decreased. including NAFTA. Agriculture is the only section that was not negotiated trilaterally. The study focused on the effects that gradual "phase-in" periods in regional trade agreements. such as efficient railroads and highways. and poultry products). In a study published in the August 2008 issue of the American Journal of Agricultural Economics.North American Free Trade Agreement Agriculture From the earliest negotiation. while imports increased by only 6.S. in fact. The logical result of a lower commodity price is that more use of it is made downstream. three separate agreements were signed between each pair of parties. agricultural agreement is a matter of dispute. which was only recently brought under the purview of the World Trade Organization. was due to very high trade barriers before NAFTA or other regional trade agreements.S. The rise in corn prices due to increased ethanol demand may improve the situation of corn farmers in Mexico. agricultural exports to Mexico and Canada even though most of this increase occurred a decade after its ratification.9 percent a year during the same period. agreement contains significant restrictions and tariff quotas on agricultural products (mainly sugar.S. adjusted for international prices. The Canada–U. as it has been with almost all free trade agreements that have been signed within the WTO framework. have on trade flows. many of the same rural people who would have been likely to produce higher-margin value-added products in Mexico have instead emigrated. dairy. Still. the causes of rural poverty cannot be directly attributed to NAFTA. NAFTA has increased U. Production of corn in Mexico has increased since NAFTA's implementation. instead. Most of the increase in members’ agricultural trade.4 percent annually between 1994 and 2001. agriculture was (and still remains) a controversial topic within NAFTA. internal corn demand has increased beyond Mexico's sufficiency. yet through a program of subsidies expanded by former president Vicente Fox. creating more difficult living conditions for the country's poor. and imports have become necessary. whereas the Mexico– U. pact allows for a wider liberalization within a framework of phase-out periods (it was the first North–South FTA on agriculture to be signed). Mexico did not invest in the infrastructure necessary for competition. far beyond the quotas Mexico had originally negotiated. The overall effect of the Mexico–U. Mexico's agricultural exports increased 9. However. 15 | P a g e .S. Unfortunately. production has remained stable since 2000.

16 | P a g e .. at the end of the fiscal year is approximately equal to the number of admissions during the year.[22]Because DHS counts the number of the new I-94 arrival records filled at the border.e.933 (Mexicans).136 Canadians.321 of their family members (13.830 U. 74. 17.841 (U.098 foreign professionals (64.633 Canadians and 9. citizens and 15.S. in the TN status). October 2005 through September 2006).North American Free Trade Agreement Mobility of persons According to the Department of Homeland Security Yearbook of Immigration Statistics.. These numbers include both entrants under the NAFTA agreement and those who have entered under other provisions of the Canadian immigration law. as well as a number of third-country nationals married to Canadians and Mexicans) entered the U. during fiscal year 2006 (i.219 Mexican citizens were present in Canada as "foreign workers". citizens) and 13. (A discrepancy may be caused by some TN entrants leaving the country or changing status before their one-year admission period expired. in the treaty national's dependent (TD) status. while other immigrants admitted earlier may change their status to TN or TD. and the TN-1 admission is valid for one year. New entries of foreign workers in 2006 were 16. 2.S.S. as of December 1. the total of 24. Canadian authorities estimated that. Additionally.247 Mexicans) were admitted into the United States for temporary employment under NAFTA (i. 2006.904 Mexicans. or extend earlier granted TN status).S. the number of non-immigrants in TN status present in the U.e.

North American Free Trade Agreement Criticism and controversies Canadian disputes There is much concern in Canada over the provision that if something is sold even once as a commodity. Studies by Health and Welfare Canada (now Health Canada) on the health effects of MMT in fuel found no significant health effects associated with exposure to these exhaust emissions. the gasoline additiveMMT was brought into Canada by an American company. The United States and Canada had been arguing for years over the United States' decision to impose a 27 percent duty on Canadian softwood lumber imports. fueling fears over the possible destruction of Canadian ecosystems and water supply. 17 | P a g e . Sun Belt Water Inc. a company out of Santa Barbara. in part due to domestic opposition in Canada.[25] This applies to the water from Canada's lakes and rivers. the Canadian federal government banned the importation of the additive. The claim sent shock waves through Canadian governments that scrambled to update water legislation and remains unresolved.sunbeltwater. the Canadian federal government repealed the ban and settled with the American company for US$13 million.. The settlement has not yet been ratified by either country. filed an Arbitration Claim under Chapter 11 of the NAFTA claiming $105 million as a result of Canada's prohibition on the export of bulk water by marine tanker. 2006. until new Canadian Prime Minister Stephen Harpercompromised with the United States and reached a settlement on July 1. At the time. a move that destroyed the Sun Belt business venture. Environmental Protection Agency disagree with Health Canada. The American company brought a claim under NAFTA Chapter 11 seeking US$201 million.S. California. the government cannot stop its sale in the future. Other Canadian researchers and the U. Following a finding that the ban was a violation of the AIT. and that the prohibition was damaging to their company. In 1996. The American company argued that their additive had not been conclusively linked to any health dangers. Sun Belt maintains a website where many documents concerning the Arbitration are posted www. Other fears come from the effects NAFTA has had on Canadian lawmaking. In and by Canadian provinces under the Agreement on Internal Trade ("AIT"). and cite studies that include possible nerve damage.

" (Nick Lifton. On 29 April 2009. Furthermore from 1994 to 2007. deindustrialization An increase in domestic manufacturing output and a proportionally greater domestic investment in manufacturing does not necessarily mean an increase in domestic manufacturing jobs. spokesman for U. the U.S. Although the U. 2007.000 in the same time period. 18 | P a g e . manufacturing jobs only increased by 476. a determination was made that this change in tax law was not expropriation. U.S. it responded by saying "We are. The couple claims thousands of U.S.654. and during this period several other free trade agreements have been concluded or expanded.S.North American Free Trade Agreement Canada had filed numerous motions to have the duty eliminated and the collected duties returned to Canada.000. but it will have no impact on the anti-dumping andcountervailing duty orders. 2006. this increase may simply reflect greater automation and higher productivity.S. investors lost a total of $5 billion dollars in the fall-out from the Conservative Government's decision the previous year to change the tax rate on income trusts in the energy sector. Court of International Trade found that imposition of the duties was contrary to U. total civilian employment may have grown by almost 15 million in between 1993 and 2001. American citizens Marvin and Elaine Gottlieb filed a Notice of Intent to Submit a Claim to Arbitration under NAFTA. After the United States lost an appeal from a NAFTA panel. of course. disappointed with the [NAFTA panel's] decision. law. Trade Representative Rob Portman) On July 21.S. Canadian government challenged on change in Income trust taxation On October 30. net manufacturing employment has declined by 3.

1 billion. a figure ten times greater than the total Mexican agricultural budget that year. U. though they agree that the abolition of U.S.S." 19 | P a g e . Other studies reject NAFTA as the force responsible for depressing the incomes of poor corn farmers.According to Graham Purchase in Anarchism and Environmental Survival. and the lack of a measurable impact on the price of Mexican corn due to subsidized corn coming into Mexico from the United States.These subsidies have lead to charges of de factodumping which jeopardizes Mexican farms and the country's food self-sufficiency.North American Free Trade Agreement Impact on Mexican farmers Critics of NAFTA cite negative affects on Mexico's corn farmers In 2000. NAFTA could cause "the destruction of the ejidos (peasant cooperative village holdings) by corporate interests. agricultural subsidies would benefit Mexican farmers. government subsidies to the corn sector totaled $10. an increase in maize production after NAFTA went into effect in 1994. and threatens to completely reverse the gains made by rural peoples in the Mexican Revolution. citing the trend's existence more than a decade before NAFTA's existence.

S. French or Spanish. he will be barred from claiming NAFTA treatment upon withdrawal because the Certificate is over four years old and is no longer valid. The Certificate shall be completed in the language of the country of export or the language of the importing country. A machine made in Canada qualifies for NAFTA tariff treatment and is exported with a Certificate of Origin signed on January 1.North American Free Trade Agreement Certificate of Origin of NAFTA Canada. importer does not enter the machine for consumption but instead places it in a customs bonded warehouse. 1995. 1999. Only importers who possess a valid Certificate of Origin may claim preferential tariff treatment for originating goods. Scope A Certificate of Origin may cover a single importation of goods or multiple importations of identical goods. Certificates that cover multiple shipments are called blanket certificates and may apply to goods imported within any twelve-month period specified on the Certificate.S. Language A uniform Certificate of Origin is used in all three countries and is printed in English. importer withdraws the machine from the warehouse for consumption on January 17. He overlooks the Certificate of Origin and fails to claim NAFTA treatment for the machine upon entry into the warehouse. at the exporter's discretion. Although a Certificate of Origin may cover goods imported over not more than a twelve-month period. If the U. it remains valid for NAFTA preference claims made up to four years from the date upon which it was signed. Mexico and the United States established a uniform Certificate of Origin to certify that goods imported into their territories qualify for the preferential tariff treatment accorded by the NAFTA. 20 | P a g e . Importers shall submit a translation of the Certificate to their own customs administration when requested. The U.

and must submit a corrected declaration and pay the corresponding duties whenever there is reason to believe that the Certificate contained inaccurate information. the exporter may complete the Certificate on the basis of: • • • knowledge that the good originates. Where no claim for preferential tariff treatment is made at the time of importation. Exporters' and Producers' Obligations Exporters or producers that prepare Certificates of Origin shall provide copies to their own customs administration upon request. Exporters or producers that provide a Certificate of Origin must maintain records pertaining to the exportation for five years or such longer period as may be specified by their countries.North American Free Trade Agreement Completion of Certificate The Certificate of Origin must be completed and signed by the exporter of the goods. Importers must maintain records pertaining to the importation for five years or such longer period as may be specified by their country. Exporters or producers that complete a Certificate of Origin shall notify all parties to whom the Certificate was given of any change that could affect its accuracy or validity. on the import documentation. 21 | P a g e . or a completed and signed Certificate of Origin for the good voluntarily provided to the exporter by the producer. The customs administration of the importing country may deny preferential tariff treatment to the goods if the importer fails to comply with any of the customs procedures set out in Chapter Five of the NAFTA. importers may request preferential tariff treatment no later than one year after the date on which the good was imported. Importers' Obligations Importers claiming NAFTA preferential tariff treatment shall make a declaration. reasonable reliance on the producer's written representation that the good originates. Importers must provide the Certificate to the importing country's customs administration upon request. Where the exporter is not the producer. based on a valid Certificate of Origin in their possession. provided a Certificate of Origin for the goods is obtained.

22 | P a g e . Europe and Latin America . economy and reducing our business with the ROW (rest of the world). is the tiny slice of green in the chart to the left. .S. as the U. economy began to slow in the "Bush" administration.highly touted as an opportunity for us in 2001 and beyond. which is reflected in an updated chart showing Canadian exports to the U. However. xx NAFTA 2006 In the later years of the 1990's it appeared that NAFTA was responsible for Canada doing more and more trade with the U.S.we still do more than 87% of our business with the U.North American Free Trade Agreement Diagramatic Records NAFTA 2001 The most significant thing about this 2000 chart is that fact that despite lots of encouragement from federal and provincial governments for Canadian exporters to seek out markets in Asia.S. Canadian companies have sought more business with the rest of the world.S.S.and therefore increasing our vulnerability to swings in the U. Mexico .

North American Free Trade Agreement How NAFTA was in 1996? . How NAFTA was in 2006? since 2001. we have done much better diversifying away from exporting mostly to the U. and are improving our exports to Asia-Pacific and Europe 23 | P a g e .S.

North American Free Trade Agreement 24 | P a g e .

S. NAFTA deficit has increased 12.S. Exports.S. evidence that deficits with Mexico and Canada are a continuing drag on U. trade with China and other lower-wage countries was displacing NAFTA trade. Contrary to this view. trade balance with the other two NAFTA countries (the difference between U.S.S. The combined U.2% so far this year.S. which expand domestic production. so the trade deficit has expanded.S.S. firms moved plants to Mexico and Canada to take advantage of lower wages and new rules providing unheard of levels of protection for foreign investors. imports have been growing more rapidly than exports. U. The rise in the U. industrial jobs.S. which replace goods that could have been produced in the United States. NAFTA trade deficit surging in 2003 U. the U. eliminate jobs.S. Since NAFTA that combined deficit has grown rapidly. NAFTA trade deficit surging in 2003 Since the U. When the growth of this deficit eased in 2002. U. the trade deficit with these countries has grown rapidly (see chart below). deficit with Canada and Mexico from 1993 25 | P a g e . increase the number of U. while imports. entered into the North American Free Trade Agreement (NAFTA) with Mexico and Canada. some claimed that U.S.North American Free Trade Agreement U. exports and imports) was a small. growth and job creation.S. stable deficit prior to NAFTA.

26 | P a g e . health care. a decade of heightened competition with the U. Many workers have been shifted into subsistence-level work in the "informal sector. and a wide range of other public services." frequently unpaid work in family retail trade or restaurant businesses. Most of those jobs would have been high-wage positions in manufacturing industries.S. The sustained growth of this deficit suggests that NAFTA continues to eliminate more jobs in the United States. real wages have fallen sharply and there has been a sharp drop in the number of people holding regular jobs in paid positions. which worsens the current economic downturn. jobs.S. This experience suggests that workers have good reasons to be concerned as we enter NAFTA's second decade. In Canada. but for different reasons.000 U. In Mexico. unemployment compensation.North American Free Trade Agreement to 2000 displaced production supported by 766. Further study of NAFTA by researchers in Canada and Mexico has shown that workers in all three countries have been hurt. is eroding social investment in public spending on education.

Opposing FTA's for two of America's closest allies. competitiveness. workers in NAFTA and other FTA's may not help American workers because it doesn't get at the source. Amend NAFTA . which is itself a result of decades of the U. He also wants to pressure the World Trade Organization to enforce current agreements and stop unfair subsidies. not investing in education. Obama Has Three Main Proposals: 1. 3. How Would Obama's Free Trade Position Impact the Economy? Putting more job protection for U.S. workers. Improve Transition Assistance . engineering.S. may damage our relationship with them while hurting the U. Obama opposes many current trade agreements. which he says are bad for the economy because they provide perks for businesses but don't protect workers. Job outsourcing is a result of declining U. In fact. This is particularly true for high tech.S. and science. Colombia and South Korea. has dropped 40% since 2002 thanks to a government protection program. economy. and the public as a whole.S. auto imports.He would re-open NAFTA to beef up protection for labor and the environment.He supports Federal funding for retraining displace U.S. Fight for Fair Trade . 27 | P a g e .S. 2.North American Free Trade Agreement What Is Barack Obama's Position on Free Trade? Overall.He opposes pending Free Trade Agreements (FTA's) with Colombia because it allows violence against labor leaders and South Korea because it restricts U. Colombia's homicide rate against union members.

NAFTA's open new markets for businesses by removing trade barriers.S. NAFTA increased trade from $297 billion to $810 billion. For example. workers who owe their jobs to exports. which are lower at 3. beef four years ago. beef to be imported as part of the agreement.S. regresses and closes its borders.S.000–900.5%.S.3 million export-related jobs were created between 1994 and 1998. 28 | P a g e . U. 1.S. Increasing U. In the U.S. farm subsidies and an unfulfilled NAFTA promise to allow Mexican commercial trucks further into the U. South Koreans remember the cases of mad cow disease found in U. protectionism will further slow economic growth and cause more layoffs. The Peterson Institute for International Economics estimates that ending all trade barriers would increase U. Current South Korean tariffs of 8% would be removed. Free trade creates more jobs than it outsources. as would current U. not less. If the U. the formation of the European Union free trade area created 300. including immigration reform. For example.S. other countries will do the same.S. This could cause layoffs among the 12 million U. tariffs.000 net new jobs. The agreement actually levels the playing field for the auto industry.S. income by $500 billion. Opening NAFTA to renegotiation would allow Mexico to address it complaints.North American Free Trade Agreement Rejection of the South Korean FTA could cause newly-elected South Korean President Lee Myung-bak to further lose support among a population who are already upset that he agreed to allow U.S.

family farms. subsidized U. Latin America and Africa. Until the U.S.S. protectionism at this time will only increase this activity. significantly reduces these subsidies. the Middle East.S.S. further progress on this multi-lateral trade agreement is effectively dead in its tracks. and further into economic decline. Contrary to popular opinion. Developing countries are afraid of low-cost. The failure of the Doha round has led to a fresh wave of bilateral trade agreements between China. essentially putting family farmers out of business. agricultural subsidies. thus pushing the U. tax programs that were designed to help Depression-era families keep their farms are now effectively subsidizing huge corporations who have. Obama's renewed pressure on the WTO to enforce other countries' subsidies could then bring into question the subject of U.S.S.S. In fact. in turn. 29 | P a g e .still a sore point in the international trade community. agricultural subsidies no longer go to U. Further U. put these family farms out of business. agricultural subsidies . farm products flooding their markets.North American Free Trade Agreement What Free Trade Issues Is Obama Missing? One of the key obstacles to the Doha round of the World Trade Organization agreement was U. economy further out of the trade loop. Instead. -www.North American Free Trade Agreement Bibliography • NAFTA’s OFFICIAL SITE • NAFTA’S HITORY 30 | P a g e .