TABLE OF CONTENTS

1.0 NAFTA Profile ............................................................................................................... 2

1.1 Member Countries .......................................................................................................... 2

1.2 Objectives of NAFTA ..................................................................................................... 2

1.3 Structure of NAFTA....................................................................................................... 3

2.0 Achievements ...................................................................................................................... 4

2.1 SUCCESS OF NAFTA ................................................................................................... 4

2.1.1 INCREASED EXPORTS AND INVESTMENT FLOWS ....................................... 4

2.1.2 INCREASED TOTAL TRADE AND BROADER ECONOMIC TRENDS: ........ 4

2.1.3 BENEFITS FOR ALL NAFTA PARTNERS: .......................................................... 5

3.0 Challenges of NAFTA ........................................................................................................ 6

4.0 Bangladesh NAFTA ........................................................................................................... 7

4.1 Analysis from Bangladesh perspective ......................................................................... 7

4.2 Impact on Bangladesh Economy ................................................................................... 8

5.0 CONCLUSION .................................................................................................................. 8

6.0 Bibliography ....................................................................................................................... 9

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1.0 NAFTA PROFILE

The North American Free Trade Agreement (NAFTA) is a treaty entered into by the United
States, Canada, and Mexico. That makes NAFTA the world’s largest free trade agreement. It
was signed by President Clinton and implemented in January 1, 1994. The three countries
became the largest free market in the world, the combined economies of the three nations at
that time measured $6 trillion and directly affected more than 365 million people. NAFTA was
created to eliminate tariff barriers to agricultural, manufacturing, and services to remove
investment restrictions; and to protect intellectual property rights. This was to be done while
also addressing environmental and labor concerns. Small businesses were among those that
were expected to benefit the most from the lowering of trade barriers since it would make doing
business in Mexico and Canada less expensive and would reduce the red tape needed to import
or export goods. (Morning, n.d.)

1.1 MEMBER COUNTRIES

1. United States
2. Canada
3. Mexico

1.2 OBJECTIVES OF NAFTA

There are some objectives which are followed by NAFTA to reach their goals. Those are
mentioned below:

¨ To eliminate trade barriers to trade in, and facilitate the cross – border movement of,
goods and services between the territories of the Parties
¨ To promote conditions of fair competition in the free trade area
¨ To Increase substantially investment opportunities in the territories of the Parties
¨ To provide adequate and effective protection & enforcement of intellectual property
rights in each territory
¨ To create effective procedures for the implementation and application of this
agreement, for its joint administration & for resolution of disputes

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 ¨ To establish a framework for further trilateral, regional and multilateral co-operation to
expand and enhance benefits of this agreement NAALC members work together to
protect, enhance and enforce the basic rights of workers.

1.3 STRUCTURE OF NAFTA

The NAFTA Secretariat, Canadian Section has one program and one business line. For
financial accountability purposes, the reporting structure is to Parliament through the Minister
of International Trade

Minister of International Trade

Canadian Secretary

Deputy Secretary

Administrative & Compensation Information Technology Registry, Legal Service &

Service Information Management

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2.0 ACHIEVEMENTS

2.1 SUCCESS OF NAFTA

NAFTA shows the advantages exchange can bring to all nations. At the point when NAFTA
was executed 10 years prior, it made the world’s biggest unhindered commerce zone, which
presently interfaces 426 million individuals in a region which produces more than $12 trillion
worth of products and ventures. During the previous decade, NAFTA accomplices have been
directing business inside a system that is amazingly open, represented by clear guidelines and
open requirement systems, with the objective of more noteworthy monetary incorporation and
collaboration. (AMADEO, 2020)A few instances of NAFTA's victory:

2.1.1 INCREASED EXPORTS AND INVESTMENT FLOWS

¨ All member economies have grown significantly:

o United States: 38% economic growth
o Canada: 30.9% growth
o Mexico: 30% growth

¨ U.S. exports to Canada and Mexico grew from US$134.3 billion (US$46.5 billion to
Mexico and US$87.8 billion to Canada) to US$250.6 billion (US$105.4 and US$145.3
billion respectively).
¨ Mexican exports to the United States reached over US$138 billion, while Mexican
exports to Canada grew from US$2.7 billion to US$8.7 billion, an increase of almost
227%.
¨ Canada’s exports to its NAFTA partners increased by 104% in value.

2.1.2 INCREASED TOTAL TRADE AND BROADER ECONOMIC TRENDS:

¨ Representing a free trade area with about one-third of the world’s total GDP, the
NAFTA economies are significantly larger than that of the European Union. Even with
the addition of ten new members, the EU’s GDP will still be well behind that of the
NAFTA region.

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 ¨ The dismantling of trade barriers and opening of markets have led to economic growth
and rising prosperity in the United States, Mexico and Canada.
¨ The total volume of trade among the three NAFTA partners expanded from $289.3
billion in 1993 to $623.1 billion in 2003.
¨ Each day NAFTA countries conduct nearly $1.7 billion in trilateral trade.

2.1.3 BENEFITS FOR ALL NAFTA PARTNERS:

All the NAFTA member countries get partners benefits among them.

Country Name Benefits

In the first decade of NAFTA, U.S. manufacturing

output soared, U.S. employment grew, and U.S.
manufacturing wages increased dramatically.
¨ UNITED STATES
Income gains and tax cuts from NAFTA were worth up
to $930 each year for the average US household of four.
(wikipedia, n.d.)

Wages in export-related industries are 37% higher than

the rest of its economy. Mexican wages and
employment tend to be higher in states with higher
foreign investment and trade, and migration from those
states is lower. Wages are also higher in sectors with
¨ MEXICO more exposure to imports or exports. (Wikipedia, n.d.)
Two-way agricultural trade between the United States
and Mexico increased more than 125% since NAFTA
went into effect, reaching $14.2 billion in 2003
compared to $6.2 billion in 1993.

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 Merchandise exports to the United States expanded by
250% since 1989 and account for 87.2% of Canada’s
total merchandise exports.
¨ CANADA Foreign Direct Investment in the finance and insurance
industry accounted for 36% of Canadian FDI in Mexico
in 2001, while not even registering in 1989.

3.0 CHALLENGES OF NAFTA

1. U.S. Jobs Were Lost: According to Economic Policy Instituted they estimated a loss
of 500,000-750,000 U.S. jobs. Most were in the manufacturing industries in California, New
York, Michigan, and Texas. Though the estimated job gains exceed those lost, certain
industries were particularly impacted, including manufacturing, automotive, textile, computer,
and electrical appliance industries.

2. Minimum Wages in NAFTA Negotiations: Companies take step to move to

Mexico to keep workers from joining unions. Without the unions, workers could not bargain
for better wages. (Scott, 2011)This strategy was so successful that it became standard operating
procedure. There difference in minimum wages between Mexico and the United States is one
of the most notorious wage differentials between countries that share a border. However, this
does not necessarily mean unfair competition on the part of Mexico, and to increase wages
without an adequate comprehensive economic analysis could mean the loss of a comparative
advantage that developing countries, such as Mexico, have over developed countries such as
Canada and the United States in regard to commercial exchanges. (Palma, n.d.)

3. Mexico's Farmers Were Put Out of Business: According to United States Department
of Agriculture. Mexico lost over 900,000 farming jobs in the first decade of NAFTA. NAFTA
allowed U.S. government-subsidized farm products into Mexico. Local farmers could not
compete with the subsidized prices. It forced unemployed farmers to cross the border illegally
to find work. while dramatically increasing corporate agribusiness' profits, market control and
the monopolization of our farm and food industry. These changes, coupled with the rapid
expansion of publicly financed and often un-regulated corporate factory farms, have put

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thousands of independent livestock and dairy producers out of business. This situation
confronting independent family farmers is dire.

4. Maquiladora: In 1964, Mexico launched IMMEX (Maquiladora, Manufacturing and

Export Services Industry), also known as the Maquiladora Program. It aims to attract foreign
investment, create jobs, foster industrialization and boost Mexico’s economy, especially along
the U.S. border. The program, jointly administered by Mexico and the U.S. They are often
referred to as in-bond plants, since foreign owners are permitted to import machinery and
components duty-free; no tariffs are paid if the products are re-exported from Mexico. Since
states and cities in Mexico have little authority to levy taxes, most maquiladoras do not pay
state and local taxes. (U.S. Department of Transportation , 2002)

5.Mexico's Environment Deteriorated: After NAFTA Mexico`s environment pollution

rate is increasing rapidly. The farmer of Mexico used more fertilizers and other chemicals,
resulting in increased pollution. Rural farmers were forced into marginal land to stay in
business, resulting in increased deforestation rates. That deforestation contributes to global
warming.

4.0 BANGLADESH NAFTA

4.1 ANALYSIS FROM BANGLADESH PERSPECTIVE

Bangladesh face a huge loss because of NAFTA. Because NAFTA members are getting more
benefit from this. The results suggest that the total export decline could be about one percent
with the projections for Bangladesh slightly higher (due to the higher-than-average share of
textiles and clothing in Bangladesh's total exports). The study argues that a successful
completion of the Uruguay Round would considerably reduce Bangladesh potential losses
since it would lower the preference margins that NAFTA could provide member countries. The
clothing and textile main item for the concern. Because big number item export from South
Asia. It’s a big disadvantage for Bangladesh.

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4.2 IMPACT ON BANGLADESH ECONOMY
The model focuses on NAFTA's short-run impact on South Asian trade. This study does not
address dynamic long-run effects, such as changes in terms of trade, investment diversion, and
externalities associated with the growth dividend. The results suggest that the total export
decline could be about 1 percent, with projections for Bangladesh slightly higher (because
textiles and clothing represent a higher-than-average share of Bangladesh's exports). The
authors argue that successful completion of the Uruguay Round would considerably reduce
South Asia's potential losses, as it would lower the preference margins that NAFTA could
provide its member countries. To put the two events in perspective, the authors note that the
trade gains South Asian countries could experience from successful completion of the Uruguay
Round are about 100 times greater than the losses they might incur from NAFTA.

5.0 CONCLUSION

In conclusion of our research on NAFTA from its historical beginning to the present, the future
of North America Free Trade Agreement stands at a crossroad. There have been clear benefits
for the U.S., Canada, and Mexico throughout the past 26 years of its existence. From job
growth, foreign investments, and increased trade among the three countries. Research has also
shown that there are disadvantages that have affected possible American jobs and Companies
going abroad for the benefits of lower labor cost and VAT tax. Economist has debated with all
the changes in technology and other factors, such as trading with other foreign countries such
as China. NAFTA has drawn the attention of the United States President Donald Trump, he has
planned to work with Canada, and Mexico renegotiates the free trade agreement. The meetings
are scheduled, and the three countries are all willing to make changes to NAFTA that are
reasonable for all included parts. It is yet to be known the outcome or the possible effects that
their negotiations will have on The North America free trade Agreement and if U.S. will stay
or withdraw. In hopes for growth of the United States economy and jobs for the American
people, NAFTA renegotiations could be just what our country needs. Time will tell.

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6.0 BIBLIOGRAPHY

AMADEO, K. (2020). thebalance. Retrieved from NAFTA Facts, Statistics, and

Accomplishments: https://www.thebalance.com/facts-about-nafta-statistics-and-
accomplishments-3306280

Hartman, S. W. (2011). NAFTA, the controversy. Retrieved from researchgate:

https://www.researchgate.net/publication/233059826_NAFTA_the_controversy

Morning, I. T. (n.d.). North American Free Trade Agreement (NAFTA) . Retrieved from Inc.
This Morning: https://www.inc.com/encyclopedia/north-american-free-trade-
agreement-nafta.html

Palma, L. (n.d.). Retrieved from Mexico: The Importance of Minimum Wages in NAFTA
Negotiations: https://www.shrm.org/resourcesandtools/legal-and-
compliance/employment-law/pages/global-nafta-mexico-minimum-wage.aspx

Scott, R. E. (2011). Retrieved from U.S.-Mexico trade and job displacement after NAFTA:
https://www.epi.org/publication/heading_south_u-s-
mexico_trade_and_job_displacement_after_nafta1/

The USTR Archives. (2017, July 4). NAFTA: A Decade of Success. Retrieved from Office of
the united states trade representative: https://ustr.gov/about-us/policy-offices/press-
office/fact-sheets/archives/2004/july/nafta-decade-success

U.S. Department of Transportation . (2002). North American Free Trade Agreement – U.S.
Department of Transportation Regulations . Retrieved from
https://cms8.fmcsa.dot.gov/sites/fmcsa.dot.gov/files/docs/NAFTA_Fact_Sheet_508C
LN.pdf

Wikipedia. (n.d.). Effects of NAFTA on Mexico. Retrieved from Wikipedia:

https://en.wikipedia.org/wiki/Effects_of_NAFTA_on_Mexico

wikipedia. (n.d.). North American Free Trade Agreement. Retrieved from wikipedia:
https://en.wikipedia.org/wiki/North_American_Free_Trade_Agreement