North America Free Trade Agreement (NAFTA)

North America Free Trade Agreement (NAFTA)

The CalChamber actively supported the creation of the North America Free Trade Agreement (NAFTA) among the United States, Canada and Mexico, comprising 484.3 million people with combined annual trade with the United States being around $1.1 trillion in 2015. In 2015, goods exports totaled over $516 billion while goods imports totaled nearly $590 billion. U.S. Department of Commerce; World Bank

  • U.S. Chamber of Commerce: NAFTA Triumphant: Assessing Two Decades of Gains in Trade, Growth and Jobs
    The Chamber has released an updated version of their 2012 report on the benefits of the North American Free Trade Agreement (NAFTA).

Fifth California-Mexico Advocacy Day: “Challenges and Opportunities 20 years from NAFTA”
Consulate General of Mexico in Sacramento, May 6, 2014

The historic agreement, after passing through both the U.S. House of Representatives and the U.S. Senate, was signed into law by President Bill Clinton on December 8, 1993, and took effect on January 1, 1994.

On December 17, 1992, the NAFTA was signed by President George H.W. Bush, Mexico President Carlos Salinas, and Canadian Prime Minister Brian Mulroney. The framework agreement proposed to eliminate restrictions on the flow of goods, services, and investment in North America.

The CalChamber’s support for NAFTA is based upon an assessment that it serves the employment, trading and environmental interests of California and the United States, as well as, Canada and Mexico, and is beneficial to the business community and society as a whole. Since 1993, trade between the three NAFTA countries has nearly quadrupled.

The U.S. Department of Commerce shows that Mexico continues to be California’s number one export market.

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Mexico and the U.S. are Moving toward a More Efficient Border

According to NAFTA Works, on October 17th, 2014 customs authorities from the U.S. Customs and Border Protection (CBP) and Mexico’s Tax Administration Service (SAT in Spanish) signed an agreement to mutually recognize two customs security programs that are currently in place in both countries. The agreement allows stronger collaboration between both programs by creating a common structure aimed at streamlining and securing cargo trade across the border.

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NAFTA: 20 Years Later
CalChamber, December17,2013

“Over the 18 years that the NAFTA has been in force, trade among Mexico, the United States and Canada has multiplied more than three times, setting a historical record of $1 trillion in 2011.”

NAFTA Works Newsletter, April 2012

According to a study conducted by the the U.S. Chamber of Commerce, “Trade with Canada and Mexico supports nearly 14 million U.S. jobs, and nearly 5 million of these net jobs are supported by the increase in trade generated by NAFTA.”
NAFTA Triumphant: Assessing Two Decades of Gains in Trade, Growth, and Jobs.
US Chamber November 2012 Report

Among the report’s key findings:

  • Since NAFTA entered into force in 1994, trade with Canada and Mexico has risen three-and-one-half fold to $1.1 trillion, and the two countries buy about one-third of U.S. merchandise exports.
  • Trade with Canada and Mexico supports nearly 14 million U.S. jobs, and nearly 5 million of these net jobs are supported by the increase in trade generated by NAFTA, according to a comprehensive economic study commissioned by the U.S. Chamber.
  • The expansion of trade unleashed by NAFTA supports tens of thousands of jobs in each of the 50 states — and more than 100,000 jobs in each of 17 states.
  • Canadians and Mexicans purchased $428 billion of U.S. manufactured goods in 2011, generating $36,000 in export revenue for every American factory worker.
  • NAFTA has been a bonanza for U.S. farmers and ranchers, with one in every ten acres on American farms planted for export to Canada and Mexico.
  • With new market access afforded by NAFTA, U.S. services exports to Canada and Mexico have tripled, rising from $27 billion in 1993 to $82 billion in 2011.
  • Canada and Mexico are the top two export destinations for U.S. small and medium-size enterprises, more than 122,000 of which sold their goods and services in Canada and Mexico in 2010.

NAFTA benefits

CalChamber support for NAFTA is based upon an assessment that it serves the employment, trading and environmental interests of California and the United States, as well as Canada and Mexico, and is beneficial to the business community and society as a whole.

The objectives of NAFTA are to eliminate barriers to trade, promote conditions of fair competition, increase investment opportunities, provide adequate protection of intellectual property rights, establish effective procedures for implementing and applying the agreements and resolving disputes, and to further trilateral, regional and multilateral cooperation.

Mexico

Mexico continues to be California’s number one export market, purchasing 16.2 percent of all California exports. California exports to Mexico amounted to $26.8 billion in 2015, a 5.5 percent increase from 2014. Computers and electronic products remained California’s largest exports, accounting for 25.1 percent of all California exports to Mexico. Exports of transportation equipment and machinery from California to Mexico grew to total over $4.9 billion; with chemicals and food manufactures continuing to be strong export sectors as well.

According to a report by Visit California, nearly 7.8 million people visited California from Mexico in 2015, spending nearly $3 billion. Mexico sends more visitors to California than any other country by a wide margin.

In a report cited by the Public Policy Institute of California, it is noted that the value of property, plant and equipment (PPE) owned by Mexican companies in California is now estimated at $1.2 billion.

September 2011
U.S.–Mexico Economic Relations: Job Creation Starts with Trade

Mexico is the second-largest export market for the United States. Overthe years of the North America Free Trade Agreement (NAFTA), U.S. exports to Mexico have quadrupled, reaching $163 billion in 2010, or almost 13% of its exports worldwide.

The burgeoning of U.S. exports to Mexico has been broad based geographically under NAFTA. The 50 U.S. states have significantly increased exports to Mexico; 46 states have at least doubled their sales, which have spurred benefits beyond U.S. border states, such as Texas and California, to include the industrial Northeast, the South and the agricultural heartland.

U.S. exports to Mexico spur the creation of more and better paying jobs. Nearly 6 million jobs in the United States depend on trade with Mexico, according to the U.S. Chamber of Commerce. Many of these jobs are employed in small and medium enterprises (SMEs) throughout the United States; almost one-third of all U.S. exports to Mexico are exported by SMEs as found by the International Trade Commission.

U.S.-Mexico High-Level Regulatory Cooperation Council and Work Plan 2/2012
President Felipe Calderón and President Barack Obama instructed the creation of a Mexico – US High Level Regulatory Cooperation Council (HLRCC) in order to facilitate regulatory compliance, reduce transaction costs, and promote trade and investment between the two countries.

The HLRCC released its Work Plan on February 28, 2012, which represents an additional step to implement its objectives and increase regulatory cooperation between Mexico and the United States.

The main objectives of the HLRCC are:

  1. Making regulations more compatible, increasing simplification, and reducing burdens without compromising public health, public safety, environmental protection, or national security;
  2. Increasing regulatory transparency to build national regulatory frameworks designed to achieve higher levels of competitiveness and to promote development;
  3. Simplifying regulatory requirements through public involvement;
  4. Improving and simplifying regulation by strengthening the analytic basis of regulations;
  5. Linking harmonization and regulatory simplification to improvements in border-crossing and custom procedures;
  6. Increasing technical cooperation

To review the full text of the work plan

Canada

The U.S. Department of Commerce shows that two-way trade between Canada and the United States totaled $575.2 billion in 2015- the largest bilateral exchange in the world.

Canada remained California’s second largest export market, with California exports to Canada increasing to over$16.9 billion in 2015. Canada purchases over 10 percent of all California exports. Computers and electronic products remained California’s largest exports to Canada, accounting for over 30 percent of all California exports to Canada.

California exports to Canada directly and indirectly support approximately 110,000 jobs in California, with many of those resulting from export growth under NAFTA.

In 2011, President Barack Obama and Prime Minister Stephen Harper announced the creation of a United States-Canada Regulatory Cooperation Council (RCC) and Beyond the Border (BTB) initiatives. In recognition of our $1 trillion annual trade and investment relationship, the RCC and BTB will foster formal cooperation between the U.S. and Canada to promote economic growth, job creation, perimeter security and other benefits to our consumers and businesses through increased regulatory transparency and coordination.

CalChamber Support

California Chamber support for the NAFTA is based upon an assessment that it serves the employment, trading and environmental interests of California and the United States, as well as Canada and Mexico, and will be beneficial to the business community and society as a whole.

The objectives of the NAFTA are to eliminate barriers to trade, promote conditions of fair competition, increase investment opportunities, provide adequate protection of intellectual property rights, establish effective procedures for implementing and applying the agreement, and for resolving disputes, and to further trilateral, regional and multilateral cooperation.

NAFTA Links

NAFTA – Myth vs. Facts
NAFTA Secretariat Website
International Trade Administration Information on NAFTA

NAFTA Works is a website maintained by the Mexican Ministry of the Economy. Please visit their website to sign up for monthly newsletters related to the effectiveness of NAFTA.

 

Cross-Border Trucking

The new program is reciprocal and mutually beneficial and was established between Mexico and the United States under a Memorandum of Understanding signed on July 6th, 2011. Issuance of operating authority to Transportes Olympic is a positive step taken by the United States to come into full compliance with its commitments on long haul cross-border trucking services under the North American Free Trade Agreement (NAFTA).

California – Canada Trade Information
Embassy of Canada, April 2011

Canada Trading Partner Portal

Mexico Trading Partner Portal

Additional Information