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NAFTA Economy
Three things to
know about
NAFTA:
1. What it is and is not
2. Size of economy and trade
3. CDA-U.S. Trade
Mark Kasoff
North American
Free Trade
Agreement
Successor to 1988 Canada-U.S.
Free Trade Agreement
(CUSTA).
In force since 1994.
 Removes Most Tariffs
(import taxes).
Rules of Origin prevent cheating by other
countries.
 Equal Treatment for Direct
Investment.
Ma Maision est Votre Maison, My House
is Your House, Mi Casa es Su Casa
 Environmental Side Accord
 Labor Side Accord
NAFTA
Why Join a Trade Bloc?
 Everybody Else is Doing It!
(EU)
 Referees Make Better Calls than Players
(Trade Dispute Remedies)
 Don’t Slam that Door!
(Assured Access)
 Bigger Really is Better
(Economies of Scale)
What NAFTA Doesn’t Do
The Border: Remains a customs checkpoint
Agriculture & Textiles: Still subsidized
& protected
Cultural Industries: “Protected”
Energy & Softwood Lumber:
Managed via separate accords
Trucking: Drivers are restricted
Harmonized Standards:
Different
weights, measures, labeling rules, etc.
Barriers to Free Movement of People and Goods Remain
Share of North American
Economy & Population
MEX 7.7%
USA 84.8%
CDA 7.5%
GDP
MEX 24%
USA 68%
CDA 8%
Population
GDP (Gross Domestic Product): Total final output of
national economy.
Relative Standard of Living
CDA
$34,058
USA
$41,789
MEX
$10,627
GDP per Capita
GDP per Capita: Total final output of national economy
divided by total population.
NAFTA and the U.S.
(US$ Billions)
U.S.
Exports to Imports from
Canada
Mexico
$230.6
$134.2
$303.4
$198.3
•2006 U.S. trade with Canada and Mexico
set record highs.
•Since NAFTA, trade between Canada and
Mexico has tripled but remains small.
Canadian GDP
Other
3%
ResourceBased
6%
Manufacturing
18%
Services
67%
Construction
6%
Canada-U.S. Two Way
Merchandise Trade
$534 billion/year
$1.5 billion/day
$1
million/minute
Motor Vehicles
Oil & Coal
Machinery
Electronics
Plastics
That’s no small change!
Exports to Canada by State
(1)
(2)
(3)
(Rank)
Oregon-Canada Trade
•18% ($2.7 bn) of Oregon
exports go to Canada.
•Canada is Oregon's biggest
growth market, in dollar
terms. Export shipments to
Canada increased $1.3 bn
since 2002.