Trade Bloc

Group No :- 3Nitin Kirnapure

Vivek SethiaNishit

Dholakia

Trade blocTrade bloc

• An agreement between states, regions, or countries, to reduce barriers to trade between the participating regions.

OR• A set of countries which engage in

international trade together, and are usually related through a free trade agreement or other association

•In 1988 Canada-United States Free Trade Agreement

•In 1994 NAFTA came into existence

NAFTA

NAFTA

Effective as of January 1, 1994

A trade agreement between CANADA, MEXICO, and the UNITED STATES which provides for the elimination of tariffs on North American goods shipped among the three countries.

ObjectiveObjective

• Eliminate barriers to trade in, and facilitate the cross-border movement of, goods and services between the territories of the Parties.

• Promote conditions of fair competition in the free trade area.

• Increase substantially investment opportunities in the territories of the Parties.

Objective Cont….Objective Cont….

• Provide adequate and effective protection and enforcement of intellectual property rights in each Party's territory.

• Create effective procedures for the implementation and application of this Agreement, for its joint administration and for the resolution of disputes.

• Establish a framework for further trilateral, regional and multilateral cooperation to expand and enhance the benefits of this Agreement.

NAFTA ProsNAFTA Pros

• Goods/Services at lower cost • Tariffs reduced• Jobs created• Canadian economy is growing faster than

US and Mexico.

Impact of NAFTA on…Impact of NAFTA on…

• Trade• Industry• Agriculture• Environment• Immigration

Trade•Economy is growing•Export is growing with higher rate•Huge trade surplus•Increase in FDI and FII

Impact on Canada

Impact on Canada Impact on Canada

Agriculture•Import of agricultural prod. is increase•Canada is Big consumer of U.S. Agri. prod. •Export is also increase•Significant restrictions and tariff quotas on agricultural products (mainly sugar, dairy, and poultry products)

Environment•Negative impact on Environment•Dispute on Water

Industry•Mixed Impact on Industry

Impact on Canada

Mexico

• Economy of Mexico is the 11th largest in the world• more than 90% of Mexican trade is under free trade agreements (FTAs) with

more than 40 countries,

GDP per capita $14,932 (2009 est

GDP growth 4.8% (2009

GDP by sector agriculture: 4%, industry: 26.6%, services: 69.5% (2007 est.)

Unemployment 3.7% plus considerable

Advantage of NAFTA to Mexico

• Access to US and Canada market• Free Movement of Goods and Services to US.• Advantage of New Job opportunities• Legal Immigration Possible• Long Term and Short Term Capital flow into

Mexico

Trade after NAFTA: Mexico

Source :_ http://www.census.gov

IMPACT ON US

Trade between the United States and its NAFTA partners has soared.

U.S. imports are very labor intensive.

U.S. exports are more technologically based.

Goods at lower cost.

U.S -Mexico trade has gone up.

IMPACT ON US

America’s farmers have benefited greatly from NAFTA.

US economy has grown significantly.

U.S. manufacturing output soared.

In the 1990s, the population of the U.S has grown.

Two agreements were added to the final NAFTA negotiations.

Regulations concerning carriers moving between Canada and the U.S. have been reduced.

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Annual Trilateral Trade, 1994–2006

By establishing a strong, certain, and transparent framework for investment, the NAFTA creates an environment of confidence and stability required to make long-term investments, as a result, investment has poured into each of the NAFTA countries since 1994 .

In 2006, foreign direct investment (FDI) by each of the NAFTA partners in the other countries reached USD 533 billion, more than triple the USD 138 billion figure registered in 1993.

There is also an consistent growth from 1994 to 2006 in the trilateral trade between the countries.

CONCLUSION

In the end, when you look at the U.S. economy as a whole, NAFTA doesn't seem to be hurting the machine.

In the last two years, 3 million jobs have been added to the work force and the unemployment rate has settled into a stable range of about 5-6% - near the hypothetical natural rate of inflation.

With NAFTA, the government has implemented it's policy that the U.S. economy is shifting away from unskilled jobs and towards those that require education and skilled.

Tariffs and nontariff barriers were eliminated immediately.

It has created and eliminated jobs, which allows countries to operate at their comparative advantage.

Bibliography

• www.nafta-sec-alena.org/• www.ustr.gov/• en.wikipedia.org/• http://www.census.gov