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Info on the US (and Canada, Mexico) and EU In English
Canada Mexico VS Or in general: Resources for economists on the internet History History: Canada-U.S. Trade: A Tradition of Preferential Access Since the end of World War II, Canada-U.S. trade grew steadily into the largest bilateral trading relationship in the world. One of the more significant developments in the history of the two countries' trading relationship came in 1965 with the signing of the Canada-U.S. Auto Pact, which governed duty-free trade in automobiles and parts. Largely as the result of this agreement, trade in this sector has remained a central part of the two countries' overall trade. The Free Trade Agreement The Canada-U.S. Free Trade Agreement (FTA) took economic co-operation between the two countries to a new level. Effective January 1, 1989, under the terms of the FTA, tariffs on goods manufactured in Canada and the U.S. would be gradually eliminated over a ten-year period, provided the goods met "rules-of-origin" requirements. Many of the tariffs would be eliminated before the end of the ten-year time frame, and the initial phase-out schedule for products could be accelerated if the two sides agreed. The FTA also provided Canadian products with "national treatment" on most sales to U.S. government departments and gave equal access to potential suppliers on tendering and bidding information. A number of other sectoral and institutional issues were included in the Agreement to facilitate trade, identify exceptions and clarify other aspects of the trading relationship. In addition to the trade-creating provisions of the FTA, Canada and the U.S. have been working on the harmonisation of standards, testing and certification procedures. Prior to signing the FTA, most of Canada-U.S. trade was duty-free under GATT rules. Nevertheless, the FTA had a dramatic effect on the volume of two-way trade. Between 1988 and 1993, trade between the two countries increased by 40 percent, to $257 billion, with a strong 46 percent growth in Canadian exports to the U.S. These gains were registered despite an economic recession in the middle of this period. Specific sectors, such as office, telecommunications and precision equipment; chemical products; pharmaceuticals; and textiles showed particularly strong growth in trade. Key provisions of The North American Free Trade Agreement (NAFTA) Effective January 1, 1994, the NAFTA improved the FTA and added Mexico to the free trade zone. By this time, Canada-U.S. trade was overwhelmingly duty-free. Under NAFTA, a tariff-reduction schedule was worked out for trade with Mexico whereby tariffs would be reduced over a ten-year period from the implementation date. Most of Mexico's non-tariff barriers, such as import licences, will also be eliminated during this period. Elimination of Tariffs: Tariffs on Canadian exports to Mexico will be phased out over 10 years. Mexico has provided immediate duty-free access for many of Canada's key export interests. National Treatment: Canada, the U.S. and Mexico treat each others' goods, services, and investors as they treat their own. International investors with investments in Canada are covered by the NAFTA if they use Canada as a "home base" to make investments in the U.S. or Mexico. Secure Market Access: The NAFTA provides secure access for Canadian exports to the U.S. and Mexico. Dispute Settlement: Settlement or determination of remedies regarding anti-dumping and countervailing disputes is by bi-national panels, not domestic courts. Disagreements between investors and NAFTA governments may be settled through international arbitration. Government Procurement: All three countries have agreed to provide substantially increased access to government procurement opportunities not only in goods, but also in services, including construction services. Business Travel: Simplified procedures expedite business travel. Eligible business people can be granted temporary entry without prior approval procedures. Intellectual Property: The NAFTA includes comprehensive coverage of intellectual property rights to encompass standards of rules and enforcement. Under the NAFTA, many Mexican tariffs were eliminated immediately, including those on a range of Canada's key exports: agricultural and fish products, many metals and minerals, most telecommunications equipment, many types of machinery, and certain wood and paper items. The first year of NAFTA saw a large jump in Canada's trade with the U.S. and Mexico.
Canada's two-way trade with the U.S. rose by 21 percent, to reach $311 billion, while that
with Mexico grew at a similar rate, to total $5.5 billion. These growth rates were higher
than the increase in Canada's overall trade, meaning that North America is becoming even
more important for Canadian exporters and importers. In 1994, 82 percent of Canadian
exports went to the U.S. and Mexico, and 70 percent of imports were from these countries.
The "problem" for the US of the trade agreements is that the merchandise deficit
with Canada junped from 11bn to 23bn and the 1.7bn surplus with Mexico to a $16bn deficit.
This makes support by congress for fast track authority with Chili or even a free trade
area of the americas less likely (Chili has already negotiated two-way free trade
agreements with Canada and Mexico, seen as bridging agreements until Nafta accession is
possible.
Sources: Statistics Canada, US DEpt of Commerce, summarized in Mexican Min of FA Letter by House Democratic Leader, Richard A. Gephardt on future trade agreements February 26, 1997 the house democratic leader Gephardt wrote a letter to his democratic colleagues requesting for their support to ensure that future trade agreements promote progress in living standards, environment and human rights in the US and around the globe. His observations in Mexico made him believe that the NAFTA trade agreement did not yet contribute to improvements in these fields and that more strict conditions should be integrated in next agreements. Although some of the observations and concerns of mr Gephard are real and deserve due attention, the way of reasoning in the letter give rise to real concern. What to think about this: - foreign trade is again considered as a matter of winning and loosing. "We can't shy away from the world trading system. Exports support millions of jobs here in the US." and a few lines after that "The fact is that imports are having a tremendous impact on US jobs and living standards. Many Americans see themselves as victims, rather than beneficiaries, of recent trade agreements." - foreign trade agreements are seen as a way of addressing the environment and industrial relations as "the right to strike, organize and freely associate". So, "we've seen clearly that the failure to adequately enforce such core labor laws in Mexico means that Mexican wages have failed to rise". And if wages fail to rise Mexican firms create too much competition for US workers! Where is Gephard right? Well I agree with his conclusion that "trade, labor and the environment are inextricable intertwined" and that "trade agreements should not become vehicles to undermine progress in these important fields." More attention in future trade agreements for these matters will contribute to welfare and health of the workers in the poorer country. Where is he wrong? It is erroneous to think that by means of introducing and stimulating some basic rights for workers in the countries concerned, the competitiveness of American firms will increase. Imports are not competing with jobs in the US, but a way of fulfilling consumer demands more efficiently and providing cheaper inputs for products competing on the domestic and world markets and thus generating jobs. Imports create jobs as well!!!! And what is also wrong? "Given fair trade rules, American farmers, workers and businesses can out compete anyone". I am sure that I can find an example where they cannot. At least in basic economic knowledge we can out compete mr Gephard. 500 companies from the Netherland are present in Canada. The netherlands is the third
largest investor in Canada, more than Japan. The cumalative investments amount to 7,35 mld
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