NAFTA and North American Trade Trends

Transcription

1 NAFTA and North American Trade Trends by John O. Kuforiji, Ph.D. Associate Professor of Economics & Finance College of Business Administration Prince Mohammad Bin Fahd University P. O. Box 1664 Al-Khobar, KSA Being a paper presented at the National Technology and Social Science Conference of October 6-8, 2013; New Orleans, LA, USA

2 ABSTRACT The paper examines the impacts of the 1993 North American Free Tree Agreement s (NAFTA) on the North American international trade trends from 1993 to 2012 in line with the goals, objectives and provisions of that agreement. On January 1, 1994, NAFTA came into force and by January 1, 2008, all its duties and quantitative restrictions were removed. Empirically, Canada-US, Mexico-US, and Canada- Mexico trade distributions moved from 69.7, 29.0 and 1.3 in 1993 to 53.6, 43.1, and 3.3 in 2013, respectively. Empirical data trend to suggest that NAFTA promoted trade and economic growth of NAFTA partners within the period under review. However, a thorough review of NAFTA s implementations and impacts indicated something contrary. The broken promises of NAFTA accounted, in part, for why the Free Trade Area of the Americas (FTAA) had not come into effect. Furthermore, the increased number of other various trade relations between NAFTA partners and the rest of the world had some negative implications on NAFTA and FTAA. The paper concludes with some policy recommendations on NAFTA as well as points out on how to revive FTAA and to move forward with the implement of the same. I Introduction The three largest countries in the northern part of the Western Hemisphere signed NAFTA trade pact on December 17, The countries are Canada, United States of America and Mexico. This Agreement was ratified by the national legislatures of the countries in NAFTA went into effect on January 1, Although NAFTA was an extension of the Canadian-U.S. free-trade agreement of 1988; but it is the general believe that NAFTA was inspired by the success of the European Common Market. Unlike the European Community (EC), NAFTA ensures neither common trade barriers against the rest of the world nor the free flow of labor. There are no plans to create central North American government bodies like the European Parliament and the EC bureaucracy. There was no serious talk about a common currency system in NAFTA like that of the EC (Smith, 1995). In a summary, NAFTA was a comprehensive plan for trade between the members under the umbrella of the General Agreement on Tariffs and Trade (GATT) which was replaced by the World Trade Organization (WTO) in The debate on NAFTA fell into two groups among the trade policy experts. The first group of experts believed that NAFTA had promoted economic development of North America (Hufbauer and Schott, 2005); while the other group argued that NAFTA was a disappointment (Pardee Center Task Force Report, 2009; Scott, 2011; and Public Citizen Report, 2013). However, this paper had elected not to get involved in this controversy. This is because economic growth and development are reflective of many economic variables such as productivity, human capital, wage rates, ex rates, interest rates, and even international trade. Thus, this paper tries to analyze the impact of NAFTA on the North American international trade trends; and not the economic impact of NAFTA on the region. This is because the economic impacts of NAFTA are indirectly being influenced by other economy factors. The impact of NAFTA on the intra-nafta trade is somehow controversial. The available data seem to suggest that trade went well under NAFTA; but on the other hand, inside facts behind the scene indicated something contrary to the data. The inside facts partially explained why the FTAA was not signed by all its potential members. Following this introduction are the pre- and post- NAFTA free trade agreements in the region. These are followed by the goals, objectives and provisions of NAFTA. Following these, are the impacts of NAFTA on the international trade trends of the three countries are next. Some comments were made on FTAA before the conclusion and policy recommendations. II Pre- and Post- NAFTA Free Trade Agreements in North America The first trade agreement in North America was U.S.-Canada reciprocal trade agreement of 1911; which was abandoned because the Canadian voters rejected the agreement. In 1965, the U.S.-Canadian Automotive Product Agreement was signed; but this agreement did not come into operation until January 1, Prior to 1986, Mexico had no formal free trade agreement with any of its current NAFTA partners because it maintained a very strong protectionist trade policy. However, upon Mexico becoming

3 a member of the General Agreement on Tariffs and Trade (GATT) in 1986; Mexico liberalized its protectionist trade and investment policies. In 1987, U.S.-Mexico s Framework of Principles and Procedures for Consultation Regarding Trade and Investment Relations was signed (Hufbauer and Schott, 1992). Two years later, The Understanding Regarding Trade and Investment Facilitation Talks agreement was signed between the U.S. and Mexico. Early in 1990, the then Mexican President approached the U.S. President with a proposal for the forming of a free trade agreement and both Presidents issued a joint statement in support of a free trade agreement in June NAFTA was signed Thereafter, NAFTA partners entered into a number of other bilateral trade agreements. For example, from 2008 to 2013, Canada concluded 11 bilateral trade agreements; from 1991 to 2012, Canada had 24 other bilateral trade agreements in enforcement; and currently, Canada has 14 other bilateral trade agreements under negotiations. Mexico and the U.S. are also involved in other series of bilateral trade agreements of their own. All these bilateral trade agreements of the individual NAFTA partners may end up killing NAFTA in future. III. III.1 NAFTA The Goals of NAFTA Based on the preamble of NAFTA, the Governments of Canada, Mexico, and United States of America, set out to achieve some specific goals. These include to: (a) contribute to the harmonious development and expansion of world trade; (b) create an expanded and secured market for the goods and services produced in the three countries; (c) create new employment opportunities and improve working conditions and living standards in the three countries; and (d) promote sustainable development in the countries. III.2 The Objectives of NAFTA As stated by Article 102 of NAFTA, the key objectives of this Agreement can be summarized as follows. These are to: (a) eliminate barriers to trade in, and facilitate the cross border movement of, goods and services between the territories of the Parties; (b) promote conditions of fair competition in the free trade area; (c) increase substantial investment opportunities in their territories; (d) provide adequate and effective protection and enforcement of intellectual property rights in each Party s territory; (e) create effective procedures for the implementation and application of this Agreement for its joint administration and resolution of disputes; and (f) establish a framework for further trilateral, regional and multilateral cooperation to expand and enhance the benefits of this Agreement. III.3 The Provision of NAFTA 1. Agriculture Tariffs on all farm products are to be eliminated over 15 years. However, domestic price-support systems were still allowed to continue provided they do not distort trade (Chapter 7 of NAFTA). 2. Automobiles After 8 years, at least 62.5 of an automobile s value must have been produced in North America for it to qualify for duty-free status. Tariffs are to be phased out over 10 years (Chapter 3, Annex 300A of NAFTA). 3. Banking U.S. and Canadian banks may acquire Mexican commercial banks accounting for as much as 8 of the industry s capital. All limits on ownership end in (Chapters 11 and 14 of NAFTA). 4. Disputes Special judges have jurisdiction to resolve disagreements within strict timetables (Chapter 20 of NAFTA).

4 5. Energy Mexico will continue to bar foreign ownership of its oil fields but, starting in 2004, U.S. and Canadian companies can bid on contracts offered by Mexican oil and electricity monopolies (Chapters 6 and 15, of NAFTA). 6. Environment The agreement cannot be used to overrule national and state environmental, health, or safety laws (Chapter 7, Subchapter B of NAFTA). 7. Immigration All the countries must ease restrictions on the movement of business executives and professionals (Chapter 17 of NAFTA). 8. Jobs Barriers designed to limit Mexican migration to the U.S. remain in force (Chapter 16 of NAFTA). 9. Patents and copyright protection Mexico will strengthen its laws providing protection of intellectual property (Chapter 17 of NAFTA). 10. Textiles A rule of origin provision requires most garments to be made from yarn and fabric produced in North America. Most tariffs are being phased out over 5 years (Chapter 3, Annex 300B of NAFTA). 11. Tariffs Tariffs on 10,000 customs goods will be eliminated over 15 years. One-half of U.S. exports to Mexico will be considered duty-free within 5 years (Chapter 5 of NAFTA). 12. Trucking Trucks will have free access on crossborder routes and throughout the three countries by 1999 (Chapter 12 of NAFTA). IV Impacts of NAFTA on the North American IV.1 Growth and Development Indicators ( ) The U.S. economy oscillated during the period under review. Its real GDP increased annually by 3.83 during the period under review. This led to employment gains, pushing the unemployment rate to 4.0 in 2000, its lowest level from 7.4 on the eve of NAFTA s coming into existence. Prices remain relatively low, with CPI inflation being 1.6 in 1998, 2002 and 2010 as against 5.4 in In fact, the U.S. economy recorded a deflation of -0.4 in The National Association of Purchasing Managers (NAPM) index and industrial production figures suggest that manufacturing activity had an average growth rate of 2.26 during the period under review; with the highest of 7.2 in On the average, U.S. recorded trade deficits with Canada and Mexico yearly; except for the first two years of the agreement, when the U.S. had trade surplus of 1.5 per year. With regards to the private service trade, U.S. recorded surplus against all its NAFTA partners. The growth and development indicators statistics, in Table III.1, indicated that the U.S. economy performed better in NAFTA era than in the pre-nafta period except in the area of trade balance. However, interest rate is expected to rise in future. The U.S. Real GDP oscillated between -6.1 in 2007 and 7.7 in 1988 as well as 6.7 under NAFTA era. Unemployment rate declined from 7.4 in 1992 to 4.0 in 2002; and there-after increased to 9.6 in Inflation rate oscillated between 1.6 in 1998, 2002, and 2010; and 5.4 in The index of industrial production (IIP) oscillated between in 1990 and 7.2 in The Canadian economy expanded rapidly under NAFTA. Its real GDP grew at an annual rate of 2.32 during the period under review. The strong growth led to employment gains, pushing the unemployment rate down to 6.0 in 2007; its lowest during the period under review. Prices remain relatively low, with CPI inflation being 0.3 in 2009 compared to 5.1 in The NAPM index and industrial production figures indicated that the Canadian manufacturing activities did poorly during the period under review. Canada recorded trade surplus with the U.S. and Mexico; because there were stronger demands for Canadian products by both countries. The growth and development indicators statistics, in Table III.2, indicated that the Canadian economy performed better under NAFTA than in the pre-nafta era. With excess capacity in the Canadian economy no one would expect any major s in prices and interest rate levels in the near future. Real GDP oscillated between -2.8 in 2009 and 5.2 in The only negative growth rate ever recorded by Canada was in year In spite of the strong Canadian economic growth, unemployment rates were still somehow high. Inflation rate oscillated between 0.2 and 5.1. The index of industrial production oscillated between -3.1 and 6.5.

5 The Mexican economy expanded rapidly than any other NAFTA partners during the period under review. Mexico recorded an annual average growth rate of The strong economy growth rate led to employment gains, pushing the unemployment rate to as low as 2.5 its lowest under NAFTA era. In spite of high GDP growth and low unemployment rates; prices in Mexico remain relatively high. Its CPI inflation had declined from 35 in 1995 to less than 6 from 2002 to the present time. The NAPM index and industrial production data indicated that Mexico s manufacturing activities did poorly during the period under review. Mexico recorded trade surplus with Canada and United States. The growth and development indicators statistics, in Table III.3, indicated that the Mexican economy performed better under NAFTA than in the pre-nafta era. However, interest rate is expected to rise in future. Real GDP oscillated between -0.2 in 2001 and 20.2 in Unemployment rates are on the decline trends except for the years 2009 and Inflation rate oscillated between 3.6 in 2006 and 35.0 in 1995, but it has since declined in the last decade rapidly. The index of industrial production oscillated between -7.5 and IV.2 Impact of NAFTA on Merchandise Trade Trends ( ) Trade between the U.S. and Canada was in favor of Canada (Dacher, 1996). In numerical terms, both U.S. exports and imports increased during the period under review by 192 (Villareal and Fergusson, 2013). However, U.S. recorded trade deficits with Canada on ever year under review. These deficits oscillated between $5.9 billion in 1991 and $78.5 billion in The U.S.-Canada Merchandise Trade statistics, in Table III.4, indicated that the U.S. maintained a sizable trade deficit with Canada both in the pre-nafta and under NAFTA era. The trade deficits under NAFTA era is more than in the pre- NAFTA era. Trade leading items between the U.S. and Canada are oil and gas, motor vehicles and parts, petroleum and coal products, and nonferrous metal and processing. Trade between the U.S. and Mexico was in favor of Mexico; but grew by 506 (Villareal and Fergusson, 2013). Empirically, both U.S. exports to and imports from Mexico increased on annual average of over 10 during the period under review. But, the U.S. recorded trade deficits of over 20 annually with Mexico in the same period under review. The U.S.-Mexico Merchandise Trade statistics, in Table III.5, indicated that the U.S. maintained a sizable trade deficit with Mexico under NAFTA but trade surplus in the last three years prior to NAFTA and the first two years of NAFTA era. The trade deficits under NAFTA are more than the pre-nafta era deficits. Between 1995 and 2012, the U.S. trade deficits with Mexico had been in the excess of U.S. $15 billion to U.S. $74.8 billion, annually. The devaluation of the Mexican currency in 1995 must have increased the competitiveness of Mexican goods in the U.S. market against the U.S. exported goods in the Mexican market. Trade between Canada and Mexico was in favor of Mexico. The Canada-Mexico Trade statistics indicated that the Canadian economy needs some improvement because Canada maintained sizable trade deficits with Mexico both in the pre-nafta and NAFTA era. The Canadian trade deficits under NAFTA are more than the pre-nafta era. The devaluation of the Mexican currency in 1995 must have increased the competitiveness of Mexican goods in the Canadian market against Canadian exported goods in the Mexican market especially in the area of motor vehicles and parts trade with Mexico. IV.3 Impact of NAFTA on Private Services Trade Trends ( ) The Private Services Trade trend between the U.S. and Canada is in favor of the U.S. during the period under review. Although both U.S. exports and imports increased but the yearly U.S. exports are more than doubled the import figures in the post-nafta period. The U.S.-Canada Private Services Trade statistics, in Table III.7, indicated that the U.S. maintained a sizable service trade surplus with Canada under NAFTA. Like the U.S.-Canada data, the Private Services Trade trend between the U.S. and Mexico is in favor of the U.S. during the period under review. Although both U.S. exports and imports with Mexico increased yearly; but not as much as with the U.S.-Canada trade trends in the post- NAFTA period. The U.S.-Mexico Private Services Trade statistics, in Table III.8, indicated that the U.S. maintained a sizable service trade surplus with Canada in the NAFTA era.

6 IV.4 Impact of NAFTA on Foreign Direct Investment Trends ( ) The U.S. recorded higher foreign direct investment trends than all the NAFTA partners and the Canadian trends came second. The Foreign Direct Investment statistics, in Table III.10, indicated that the U.S. maintained a sizable foreign investment in both Canada and Mexico in under NAFTA. The U.S. foreign investment in Canada is 150 of the Canadian foreign direct investment in the U.S. The U.S. foreign investment in Mexico is about 600 higher than the Mexican direct investment in the U.S. The Canadian foreign direct investment with Mexico oscillated yearly. It varies from U.S. $238 million in 2002 to U.S. $3,107 million in On the whole, NAFTA removed all investment barriers. IV.5 Some Areas of Concerns under NAFTA The facts presented above seem to suggest that NAFTA is a problem-free agreement. However, other facts available tend to suggest that the promises of NAFTA were never fulfilled and those fulfilled were opposites of what they promised (Public Citizen, 2013). Under NAFTA, the U.S. recorded massive trade deficits with Canada and Mexico as pointed above. By 2004, the U.S. lost over one million jobs due to its trade deficits with Canada and Mexico (Scott, Salas, and Campbell, 2006). Agriculture seems to be a major issue. The U.S. and Mexican small scale farmers were displaced under NAFTA. There were concerns that NAFTA undermines safety standards for imported foods (Public Citizen, 2003). With the loss of farmlands by the Mexican farmers; severe job displacement in agriculture occurred in Mexico and this promoted the migration of Mexicans into the U.S. In 1997, the U.S. and Mexico had some disputes on sugar trade. The U.S. was accused of dumping its high fructose corn syrups (HFCS) in Mexico at less than the fair market prices. Mexico retaliated with anti-dumping tariffs in January In February 1998, the U.S. industry and the U.S. Administration responded trying to invoke Chapter 19 of NAFTA. The U.S. Trade Representatives sought the assistance of WTO to resolve the problem. Also, there were some tensions between the U.S. and Canada on agricultural trade. However, on December 4, 1998, both countries announced a series of steps aimed at easing the tensions in agricultural trade between them. The U.S. and Canada are at the crossroad on the issue of magazine industry. In order to protect its magazine industry, Canada had imposed an 80 excise tax on local editions of foreign magazines (split-runs) and granted post al subsidies on Canadian titles. In 1997, the WTO ruled that the Canadian policy was in violation of NAFTA and WTO agreements. In order to protect its magazine industry, Canada introduced Bill C-55. Another area of dispute is the issue of liberalization of trucking arrangements, truck safety and environmental standards (Wallach and Tucker, 2007). For example, the U.S. Department of Transportation s Report #: tr of December 28, 1998, indicated that truck liberalization was put on hold then. The reason for this action is the safety of the Mexican trucks entry into the U.S., which the Mexican authorities had promised to look into. The Mexican government threatened to retaliate with trade sanctions if the U.S. did not open its border by June Finally, the U.S. gave-in to Mexico. American companies are more interested in exporting products to Mexico rather than exporting jobs. Despite the significant labor cost advantage in Mexico, most U.S. firms find the work skills and organizational competency of the American work force much more desirable. Almost two-thirds of the Fortune 1000 firms surveyed believed that, although the lower labor costs available in Mexico are seen as a definite attraction, 61 percent of these firms see Mexico more as a marketing opportunity. Never the less, some plant closings in the U.S. in the post-nafta era were attributed to the negative effects of NAFTA [Antonelli, (1997), Clark, (1997)]. There are series of trade conflicts among the NAFTA Partners. Mexico brought nine cases against the U.S. while the U.S. brought six cases against Mexico. Canada brought fifteen cases against the U.S. while the U.S. brought five cases against Canada (Public Citizen, 2013). In the wake of conflicts and counter conflicts among the NAFTA Partners; it was no surprise that the FTAA had not taken off.

7 V The New International Trade Organizations NAFTA was established under the umbrella of the General Agreement on Trade and Tariff (GATT). This is because GATT allowed multilateral trade negotiations under it. GATT was a post- World War II set of rules for reducing and limiting trade barriers and for settling trade disputes. GATT was replaced by the World Trade Organization (WTO), which officially come into being January 1, One hundred and twenty-five nations were signatories to its agreements. WTO had become a code of conduct governing 90 percent of world trade. In fact, WTO has been called upon by NAFTA member nations requesting that the former should serve as an arbitrator whenever the latter have disputes. At the Summit of the Americas (SOA) of December 1994 in Miami, Heads of State and Governments from 34 countries throughout the Western Hemisphere agreed to construct the Free Trade Area of the Americas (FTAA), stretching from Alaska to Tierra del Fuego, by the year FTAA will lead to greater market access to the dynamic Latin American market, and free trade is the market access tool which will best achieve it. However, FTAA has not taken off yet. Factors responsible for this will include:- the failure of the Mar del Plata summit of 2005 to set out a comprehensive agenda to keep FTAA alive; the late Venezuelan President s, Hugo Chavez, view that FTAA is an annexation plan and tool of imperialism to exploit the Latin American countries; and for the fact that each of the NAFTA partners have various individual bilateral trade agreements with many of the Latin American countries. Currently, there are some negotiations going on towards the Trans-Pacific Partnership (TPP) Free Trade Agreements among in the Asia-Pacific region members. When agreement is reached on TPP; this will surely have some negative effects on NAFTA trade trends. Furthermore, the presence and influence of China in North America cannot be ignored and this also will affect the future of NAFTA. Given all the above facts, no one knows what will happen to NAFTA and FTAA in the near future. VI Conclusion and Recommendations NAFTA is a success by all measures. Exports and imports increased at relatively equal rates producing balanced growth. As documented by above, the two-way trades between the U.S. and Mexico grew by 23 percent yearly; between U.S. and Canada grew by 15 yearly; and between Canada and Mexico grew by 16.4 yearly. Both the U.S. and Canada recorded trade deficits with Mexico. Viewed in light of Mexico s economic problems; year 1995 was one of Mexico s worst economic years on record since In 1995, Mexico s real GDP fell by about Its inflation was about 35 and its IIP stood at With NAFTA in place, Mexico bounced back into black. On the whole however, economic activities of the three countries expanded under NAFTA. The strong economic growth of the U.S. and Canada led to lower unemployment rates, lowered inflation rates, and improve the index of industrial production. The two-way trades between the U.S. and Mexico; between U.S. and Canada; and between Canada and Mexico; grew more in under NAFTA. Mexico recorded trade surpluses with the U.S. and Canada under NAFTA. Canada had trade surplus with the U.S. and a trade deficit with Mexico under NAFTA. Canada seems to have a higher comparative advantage against the U.S. and Mexico in the area of motor vehicle and auto parts trade. Given the above facts, NAFTA had promoted growth and trade in North America. It had also assisted in putting inflation and unemployment in the regional under control. The big problem with NAFTA is that unfair national trade laws are still in effect in the three countries (Baer, 1994). However, for the region to fully reap the benefit of NAFTA, all the three countries need to act responsibly and professionally. With the coming of TPP; it is envisaged that if the three countries did not implement the provisions of NAFTA to the letters, they will not be able to benefit fully when TPP is in operation in future. NAFTA partners need to examine all their rules of engagements under NAFTA. They need to abandon the rules that create conflicts between them and apply what-ever works. There is need to resuscitate the FTAA for the benefits of the partners; because nearness of FTAA nations is an added advantage in terms of the transport and spill-over effects of free trade agreements.

8 REFERENCE Antonelli, Cesca, Uncommon Adjustment, Pittsburgh Business Journal, Vol. 17, Issue 16, Nov Baer, M., The NAFTA Debate, Lynne Rienner Publishers, Inc., Boulder, Co., 1994 Bhagwati, Jagdish, The High Costs of Free trade, Financial Times, May 31, 1995 Clark, Kim, Apparel Markets Move South: The Fallout from Freer Trade, Fortune, Vol. 136, Czinkota, Michael R., et at., Global Business, 2 nd Ed., Harcourt Brace & Co., Orlando: FL., 1998 Dacher, Paul NAFTA: A Status Report, Business America, Issue N, August 1996, p10 Eckert, Toby, NAFTA Nifty for some, but for all, Indianapolis Business Journal, Vol. 17, Issue 40, Dec. 1996, p19 Hufbauer, Gary C. and Jeffrey J. Schott, North America Free Trade: Issues and Recommendations, Institute for International Economics, 1992 Hufbauer, Gary C. and Jeffrey J. Schott, NAFTA Revisited: Achievements and Challenges, Institute for International Economics, 2005 Mexico-Canada Trade Report, Mexico Ministry of the Economy, June NAFTA Strategy: Export Products, not jobs, Corporate Board, Vol. 15, Issue 88, Sept/Oct. 1994, p25 NAFTA, Massachusetts Institute of Technology, Boston, MA: 1993 Pardee Center Task Force Report, The Future of North American Trade Policy: Lessons from NAFTA, Boston University, November Public Citizen, (2003), U.S. Implementation of Trade Rules Bypasses Safety Requirements. Public Citizen Report (2013), NAFTA s Broken Promises : Outcomes of NAFTA Ryan, Richard Border Towns Face Pollution Crisis Two Years into NAFTA, The Detroit News, Jan. 2, 1996 Scott, Robert E., Carlos Salas, and Bruce Campbell, Revisiting NAFTA: Still Not Working for North America s Workers, Economic Policy Institute Briefing Paper 171, Sept Scott, Robert E. (2011), Heading South: U.S.-Mexico Trade and Job Displacement under NAFTA, Economic Policy Institute, May 3, 2011 Smith, Albert, Economic Issues, Dushkin Publishing Group, Inc., Guilford, CT., 1995 Urteaga, Paul, How NAFTA pumps up Georgia Economy, Atlanta Business Chronicles, July 25, 1997 Villareal, M. Angeles and Ian F. Fergusson, (2013), NAFTA at 20: Overview and Trade Effects, CRS Report for Congress #R42965, February 21, Wallach, Lori and Todd Tucker, NAFTA Cross-Boarder Trucking Case, Public Citizen, March 1, 2007

9 Table III.1:- U.S. Key Economic Indicators - ( ) Year GDP YEARLY CHG UR CHG IN CPI IIP YEARLY CHG Source: World Almanac; Bureau of Economic Analysis; Statistical Abstract of the U.S.; Bureau of Labor Statistics; Board of Governors of the Federal Reserve System CHG = Percentage GDP = Gross Domestic Product UR = Unemployment Rate CPI = Consumer Price Index IIP = Index of Industrial Production

10 Table III.2:- Canada Key Economic Indicators - ( ) Year GDP YEARLY CHG UR CHG IN CPI IIP YEARLY CHG NA N.A N.A N.A N.A N.A N.A N.A N.A N.A Source: World Bank GDP UR CPI IIP = Gross Domestic Product = Unemployment Rate = Consumer Price Index = Index of Industrial Production

11 Table III.3:- Mexico Key Economic Indicators - ( ) Year GDP YEARLY CHG UR CHG IN CPI IIP YEARLY CHG N.A. N.A. N.A N.A N.A. 5.0 N.A N.A N.A N.A N.A N.A N.A N.A N.A N.A N.A N.A N.A N.A N.A Source: data.worldbank.org/indicator; data.un.org/countryprofile.aspx?crname = mexico GDP = Gross Domestic Product UR = Unemployment Rate CPI = Consumer Price Index IIP = Index of Industrial Production

12 Table III.4 U.S. Merchandise Trade with Canada (US $ billions) ( ) Year Exports Export Imports Import Total Trade in Total Trade Balance Change in Trade Balance Trade Source: U.S. Dept. of Commerce, U.S. Census Bureau, Foreign Trade Balance

13 Table III.5 U.S. Merchandise Trade with Mexico (US $ billions) - ( ) Imports Imports Total Trade Trade Balance Year Exports Export in total trade in Trade Balance Source: U.S. Dept. of Commerce, U.S. Census Bureau, Foreign Trade Balance

14 Table III.6:- U.S. Private Service Trade With Canada (US $ BILLION) IMPORTS IMP TOTAL SERVICE SERVICE CHG TRADE CHG TRADE IN BALANCE YEAR EXPORTS EXP CHG CHG IN STB TST N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. Source: Dollar values from (a) and (b)

15 Table III.7:- U.S. Private Service Trade With Mexico (US $ BILLION) IMPORTS IMP TOTAL SERVICE SERVICE CHG TRADE CHG TRADE IN BALANCE YEAR EXPORTS EXP CHG CHG IN STB TST N.A. N.A. N.A. N.A. N.A. N.A. N.A. N.A. Source: Dollar values from (a) and (b)

16 Year Table III.8:- Foreign Direct Investments Among NAFTA Partners (US Million) Canada to Mexico U.S. to Canada U.S. to Mexico Canada to U.S. Mexico to U.S ,922-15,221-40,373 - N.A. N.A. 1, , , , N.A. N.A. 2, , , , N.A. N.A. 1, , , , N.A. N.A. 1, , , , N.A. N.A. 3, , , , N.A. N.A. 2, , , , N.A. N.A. 1, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , N.A. N.A. N.A. N.A. N.A. N.A. 1, N.A. N.A. Source: Dollar values from (a) and (b)