EU AND NAFTA

Presented by:Ashish Porwal

The European Union

THE EUROPEAN UNION

The European Union

What is the European Union?

• Shared values: liberty, democracy, respect for human rights and fundamental freedoms, and the rule of law.

• Largest economic body in the world.

• World’s most successful model for advancing peace and democracy.

• A unique institution – Member States voluntarily cede national sovereignty in many areas to carry out common policies and governance.

• Not a super-state to replace existing states, nor just an organization for international cooperation.

• World’s most open market for goods and commodities from developing countries.

27

7

30

490million

Member States

Combined population of

EU Member States

Percent of world’spopulation

Percent of global GDP

55Percent of combinedworldwide OfficialDevelopment Assistance

The European Union

HISTORY OF EUROPEAN UNION:• The European Union is set up in 1945 with the aim of ending the

frequent wars between neighbor's which culminated in the Second World War.

• As of 1950, the European Coal and Steel Community begins to unite European countries economically and politically in order to secure lasting peace. Also in 1957, the Treaty of Rome creates the European Economic Community (EEC), or ‘Common Market’.

• May 1968 , becomes famous for student riots in Paris, and many changes in society and so-called ‘68 generation.

• Denmark, Ireland and the United Kingdom join the European Union on 1 January 1973, raising the number of member states to nine. In 1981, Greece becomes the 10th member and Spain and Portugal follow EU five years later. 

The European Union

1951

Founding Members

BelgiumFrance

GermanyItaly

LuxembourgNetherlands

The European Union

1973

DenmarkIreland

United Kingdom

The European Union

1981

Greece

The European Union

1986

PortugalSpain

The European Union

2004

CyprusCzech Republic

EstoniaHungaryLatvia

LithuaniaMaltaPoland

SlovakiaSloveniaAustriaFinlandSweden

The European Union

2007

BulgariaRomania

The European Union

EU InstitutionsEuropean Commission

• 27 Commissioners, representing the European perspective, each responsible for a specific policy area.

• EU’s executive branch proposes legislation, manages Union’s day-to-day business and budget, and enforces rules.

• Negotiates trade agreements and manages Europe’s multilateral development cooperation.

Council of the European Union

• EU’s main decision-making body, comprised of ministers of 27 Member States, representing Member State’s point of view.

• Decides on foreign policy issues.

• Council presidency rotates among Member States every six months.

European Commission President Herman Van Rompuy

The European Union

EU InstitutionsEuropean Parliament

• Voice of European citizens – members elected for five-year terms.

• With the Council, passes EU laws and adopts EU budgets.

• Approves EU Commissioners.

European Court of Justice

• Highest EU judicial authority.

• Ensures all EU laws are interpreted and applied correctly and uniformly.

• Can act as an independent policy maker but unlike the U.S. Supreme Court, the ECJ can only deal with matters covered by the Treaties.

European Parliament in session

The European Union

European Central Bank

• The European Central Bank (ECB) is the central bank for Europe's single currency, the euro.

• The ECB’s main task is to maintain the euro's purchasing power and thus price stability in the euro area.

• The euro area comprises the 15 European Union countries that have introduced the euro since 1999.

• The ECB operates independently from Member State governments.

The euro was introduced in 1999

The European Union

United in Diversity - The €uro

The European Union

The €uroIn 1999, the euro area was established as a currency in eleven of the then fifteen EU Member States.

Of the 27 EU Member States today, fifteen have adopted the euro.

One of the striking benefits of a single European currency are low interest rates due to a high degree of price stability.

The euro is as stable and credible as the best-performing currencies previously used in the euro area countries.

€

€

€

€

The European Union

1951:

• In the aftermath of World War II, the aim was to secure peace among Europe’s victorious and vanquished nations and bring them together as equals, cooperating within shared institutions.

• Based on a plan by French Foreign Minister Robert Schuman.

• Six founding countries – Belgium, the Federal Republic of Germany, France, Italy, Luxembourg and the Netherlands – signed a treaty to run heavy industries (coal and steel) under common management.

European Coal and

Steel Community

Jean Monnet and other leaders with the first “European” ingot of steel

The European Union

Treaty of Rome

• The six founding countries expanded cooperation to other economic sectors, creating the European Economic Community (EEC) – or “common market.”

• As a result, people, goods, services, and capital today move freely across the Union.

1957:

Signing of the Treaty of Rome

The European Union

The EU is a global player.

Its soft power promotes

stability, prosperity,

democracy and human

rights, delivers concrete

results in the fight to

eradicate poverty, and in

achieving sustainable

development.UN Secretary General Ban Ki-moon, High Representative for the Common Foreign and Security Policy Javier Solana, and EU Commissioner Benita Ferrero-Waldner

The EU in the World

The European Union

Addressing Global Challenges

• Peace & Security– Works for global peace and security alongside the

United States and multilateral organizations – including NATO and the United Nations.

– Undertakes humanitarian and peacekeeping missions and has provided military forces for crisis management around the globe.

• Counterterrorism & Homeland Security– Taken steps to improve intelligence sharing,

enhance law enforcement and judicial cooperation, curtail terrorist financing.

– Boosts trade and transport security to support the struggle against terrorism.

The European Union

• Democracy & Human Rights– Works globally for free elections and open

democratic processes.– Fights racism and intolerance at home and

abroad.– Campaigns globally against capital punishment.

• Development Assistance & Humanitarian Relief– The EU and its Member States are the world’s

largest aid donor, providing 55% of total official development assistance.

– Provides billions of dollars in humanitarian aid to more than 100 countries in response to crises and natural disasters.

Addressing Global Challenges

The European Union

• Trade

– European Commission represents all 27 EU Member States before the World Trade Organization.

– Supports free trade and open markets, within the rules-based structure of the WTO, to promote growth and jobs in both industrialized and developing countries.

– The world's most open market for products and commodities from developing countries – 40% of all EU imports are from developing countries.

Addressing Global Challenges

The European Union

• Environmental Protection

– A leader in global efforts to protect the environment, maintaining rigorous and comprehensive systems at home.

– Plays a key role in developing and implementing international agreements, such as the Kyoto Protocol on Climate Change.

– Executing a “cap and trade” system to reduce greenhouse gas emissions

– Takes the lead in the fight against global warming with the adoption of binding energy targets (cutting 20% of the EU’s greenhouse gas emissions by 2020).

Addressing Global Challenges

Source: German Information Center USA

The European Union

Partners in Global Leadership

• EU and U.S. work together to develop international standards:

– Fighting terrorism and transnational crime

– Advancing global trade liberalization

– Combating piracy and intellectual property violations

– Spreading benefits of globalization

• EU and its Member States are helping restore peace and stability in Afghanistan.

• EU and U.S. work together in the Middle East Quartet to advance the peace process.

• When the EU and U.S. agree, others tend to follow.

EU Commissioner Benita Ferrero-Waldner & U.S. Secretary of State Condoleezza Rice

The European Union

Shared Values and Responsibilities

• Freedom & DemocracySupport free elections, good governance, human rights, and the rule of law around the world.

• SecurityCooperate to fight terrorism, limit the spread of nuclear weapons, and work for global peace.

• DevelopmentTogether, EU and U.S. provide 80% of global development assistance and an even larger share of global humanitarian aid in times of disaster and conflict.

The European Union

A Dynamic Transatlantic Economy

• EU and U.S. together account for 40% of total global trade (more than $1.5 billion in transatlantic trade every day).

• The $3 trillion EU-U.S. transatlantic economy employs 14 million workers on both sides of the Atlantic.

• In 2005, Europe accounted for roughly two-thirds of total global investment flows into the U.S. – by far the most significant source of foreign investment in the U.S. economy.

The European Union

• European companies are the leading foreign investors in the U.S.

– The UK, Germany, France, and the Netherlands – top four sources of jobs created by foreign investment in the United States.

• American companies invest far more in EU countries than in Asia.

– U.S. businesses make 5 times the profit in the Netherlands - alone - as they make in China.

– In 2005, EU investments in Texas alone surpassed all U.S. investments in China and Japan, combined.

BMW’s assembly plant is South Carolina’slargest private sector employer.

The European Union

Future of Transatlantic Relations

• EU and U.S. face common challenges that are global in origin and impact. With global challenges, come global responsibilities.

• EU and U.S., with our shared values and common interests, are natural partners to give a lead in four key areas:– Promote peace, human rights and democracy

worldwide.– Confront global challenges, including security and

non-proliferation.– Foster prosperity and opportunity.– Advance strategic cooperation on energy security,

climate change and sustainable development.

The European Union

“Since no single nation can efficiently

and effectively deal with global

challenges such as climate change,

counterterrorism, non-proliferation,

pandemics and natural disasters on its

own, we commit ourselves to

strengthening our cooperation to

address these challenges.”

EU-U.S. Summit Declaration

Vienna, July 2006

The European Union

Education & Research

• EU and U.S. cooperate on science and technology education through:

– Exchange programs

– More than 700 institutional partnerships

– Vocational training

– Scholarship programs

– R&D cooperatives

• EU and U.S. provide joint or dual higher educational degree programs.

• EU funds Centers of Excellence at leading U.S. universities.

EU supports R&D to increase Europe’s growth and global competitiveness.

NAFTA

HISTORY OF NAFTA

• NAFTA (NORTH AMERICAN FREE TRADE AGREEMENT) is an agreement signed by the governments of the United states, Canada and Mexico creating a trilateral trade bloc in North America.

• Members: Canada, Mexico & United States

• Official languages: English, French and Spanish

• Secretariats: Mexico city, Ottawa, Washington D.C.

• Establishment: 1 January 1994

• GDP of NAFTA alliance: USD 12 trillion

• NAFTA supplements: NAAEC & NAALC

BACKGROUND

In 1988 Canada & the United States signed the Canada-United states Free Trade Agreement

The American government then entered into negotiations with the Mexican government for a similar treaty

Canada asked to join the negotiations in order to preserve its perceived gains under the 1988 deal

The agreement NAFTA was signed by

• U.S. president - George H. W. Bush,

• Canadian prime minister - Brian Mulroney

• Mexican president - Carlos Salinas in San Antanio, Texas on December 17,1992.

AMENDMENT • Final provisions (NAFTA) were fully implemented on January 1, 2008.

•NAFTA one of the most successful trade agreements in history and has contributed to significant increases in agricultural trade and investment.

•Most comprehensive Regional Trade Agreement signed by the United States.

TRADE AND INVESTMENT EFFECTS :

•TRADE AND INVESTMENT EFFECTS NAFTA is a broad agreement. From 1994 to 2008, U.S. exports to Mexico rose 91%, compared to 41% to the world. U.S. imports increased by 179%, compared to 89% from the world.

•After fourteen years, most tariffs have gone to zero, except for some very sensitive (mostly agricultural) goods that have limited protection for up to 15 years

TRADE WITHIN THE GROUPProvides job opportunities :

•Employment in Canada grew by 11 percent, generating 1.8 million new jobs.

•Employment in Mexico grew by 22 percent, generating 2.2 million new jobs.

•Employment in the United States grew by more than 16.3 percent, generating 18.1 million new jobs.

WORKS FOR SMALL AND MEDIUM SIZED BUSINESS:

•97 percent of Canadian, 96 percent of U.S. and 95 percent of Mexican exporters are small and medium sized businesses.

NAFTA's partners created an independent and effective rules-based system in order to avoid disputes within the group

Main production within the group is of Electronic, Automotive and Textile industries

NAFTA IN PERSPECTIVE • U.S. two-way trade with Canada and Mexico exceeds U.S. trade with

the European Union and Japan combined.

• In fact, US trades more with Maxico in a month than trade with other countries in a year. US exports more to Mexico in a day than with Paraguay in a year.

• US exports more in a week with Canada than with Central America in a year.

• BENEFITS : 

• NAFTA eliminates trade barriers.

• Benefits the importers by reduced or duty free goods.

• No MPF from Canada for NAFTA goods. Can make the exporter more competitive then other non-participating countries.

• 200% increase in trade among the 3 countries.

• Increase market access within each country.

LIMITATONS• It has negative impacts on farmers in Mexico who saw food prices fall

based on cheap imports from U.S. agribusiness.

• It has negative impacts on U.S. workers in manufacturing and assembly industries who lost their jobs. Critics also argue that NAFTA has contributed to the rising levels of inequality in both the U.S. and Mexico.

• Some economists believe that NAFTA has not been enough (or worked fast enough) to produce an economic convergence, nor to substantially reduce poverty rates.

NAFTA COMPLIANCE TEAM • NAFTA COMPLIANCE TEAM THREE Persons TEAM DEDICATED TO

RESOLVING NAFTA MARKET ACCESS AND COMPLIANCE CASES.

• TEAM LEADER, MEXICO AND CANADA DESK OFFICERS

• THE TEAM COMBINES EXPERIENCE IN UNDERSTANDING NAFTA REGULATIONS WITH SPECIFIC COUNTRY EXPERTISE.

• TRY TO RESOLVE PROBLEMS BY PERSUADING FOREIGN COUNTRY TO COME INTO COMPLIANCE VOLUNTARILY, AVOIDING TIME AND EFFORT INVOLVED IN FORMAL DISPUTE SETTLEMENT

PUBLIC OPINION PUBLIC OPINION Public opinion towards NAFTA in the United States,

Canada, and Mexico is mixed. A survey conducted by CIDE and COMEXI in Mexico showed that 64 percent of the Mexican public favored NAFTA.

The Program on International Policy Attitudes reported in a poll that 47 percent of Americans thought that NAFTA has been good for the United States, while 39 percent thought it had been bad for the country

Impact on Jobs • The studies indicate that the reduction in net exports to Mexico has eliminated

227,663 U.S. job opportunities since 1993, and the reduction in net exports to Canada has eliminated 167,172 job opportunities in the same period. In total, NAFTA resulted in a net loss of 394,835 jobs in its first three years.

• The analysis has found that NAFTA has eliminated significant numbers of jobs for women and members of minority groups, as well as white males. Between 1993 and 1996, women lost 141,454 jobs to NAFTA, blacks lost 36,890 jobs, and Hispanics lost 22,520 jobs, numbers closely reflecting these groups' shares in manufacturing industries

RECENT NAFTA NEWS NAFTA • NAFTA Toll Highway Destroying Prime Agricultural Land

The Trans-Texas Corridor (TTC) is no ordinary highway. The toll road would be four football fields wide. It includes separate lanes (up to six for automobiles, four for large trucks), plus tracks for freight trains, separate tracks for high-speed and commuter rail, also space for oil and gas pipelines, electricity wires, and broadband transmission cables. The implications of this scheme are staggering. Some experts say that up to a million people in Texas stand to lose their homes and 584,000 acres of rich farm and ranchland are to be destroyed, all for a privately funded highway

CONCLUSION

NAFTA is one of the most successful treaties of the times in terms of growth in trade i.e. imports & exports , G.D.P etc. but on the other hand it is also responsible for causalities like loss of jobs, migration, rising level of inequality and many others. Thus it is important that the treaty should be carried forward concerning about taking steps for the problems originated due to NAFTA ,otherwise it will create inequality in many terms which can lead to bad conditions in future for all the three countries.