NAFTA and the Americas
The CalChamber actively supports the creation of the North America Free Trade Agreement (NAFTA) among the United States, Canada and Mexico, comprising 440 million people with combined annual exports of over $1.5 trillion.
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 with California exports to Mexico totalling $18.3 billion. Mexico purchases 14 percent of all California exports.
California’s exports to Mexico are driven by computers and transportation equipment, which account for 37 percent of all California exports to Mexico. Key exports to Mexico showing growth in 2007 include processed foods and plastic products.
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.
Canada
The U.S. Department of Commerce shows that two-way trade between Canada and the United States totaled $561 billion in 2007 - the largest bilateral exchange in the world.
Canada moved up to become California's second largest export market, with California exports to Canada increasing to $16.1 billion in 2007. Canada purchases 12 percent of all California exports. Computers and electronic products remained California's largest exports to Canada, accounting for 29 percent of all California exports to Canada. Exports of machinery and chemicals from California to Canada grew in 2007 to total more than $2 billion.
California exports to Canada directly and indirectly support approximately 110,000 jobs in California, with many of those resulting from export growth under NAFTA.
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 Partners Celebrate Tenth Anniversary of Trade Agreement
In a statement issued during the October 7, 2003 meeting of the NAFTA Free Trade Commission in Montreal, then U.S. Trade Representative Robert Zoellick, Canadian Minister for International Trade Pierre Pettigrew, and Mexican Secretary of Economy Fernando Canales noted that the North American Free Trade Agreement (NAFTA) - then approaching its 10th anniversary - had clearly been a great success for the partners. The three officials noted that since January 1, 1994, when NAFTA entered into force, three-way trade among NAFTA partners had reached $621 billion, more than double pre-NAFTA levels, while foreign direct investment by individual NAFTA partners in the other NAFTA member countries had also more than doubled to reach $299 billion in the year 2000. In addition to evaluating the impact of NAFTA, the trade officials agreed on a number of actions to further stimulate trade and investment between NAFTA partners, which included efforts aimed at enhancing the transparency and efficiency of NAFTA investor-state arbitration. They also agreed to launch a study to determine if harmonization of most-favored-nation tariffs could further promote trade by reducing export-related transaction costs, and announced the creation of the North American Steel Trade Committee, which will foster increased cooperation among the partners' industries on international steel-policy issues.
View text of USIS Washington File report (includes text of joint statement)
Hemisphere-Wide Agreement
On December 11, 1994, at the Summit of the Americas held in Miami, leaders of the 34 Western Hemisphere nations (excluding Cuba) agreed to establish the world's largest free trade bloc. A Free Trade Area of the Americas (FTAA) would unite the economies of the Americas into a single free trade area and progressively eliminate barriers to trade and investment.
The FTAA is still under negotiation, but is no longer the agreement originally envisioned in 1994. The new framework agreed to at a Ministerial meeting in 2003 called for the creation of a "common set of rights and obligations" applicable to all FTAA nations, while also permitting countries to pursue additional commitments through multilateral agreements under the umbrella of the FTAA. Following the fourth Summit of the Americas in November 2005, which was attended by President George Bush and other leaders of the region, Assistant Secretary of State for Western Hemisphere Affairs, Thomas Shannon, commented, " While 29 of the 34 regional democracies are prepared to move forward immediately toward the creation of an FTAA, Brazil, Argentina, Uruguay, Paraguay, and Venezuela are not." Talks are currently on hold.
The Free Trade Area of the Americas (FTAA) will be a nearly $13 trillion economic area with over 800 million consumers.
U.S.-Chile Free Trade Agreement
U.S.-Central American Free Trade Agreement
Latin American Trade Coalition
U.S.-Peru Free Trade Agreement
Other Trade Agreements
The Americas are well developed as markets for regional trade and investment. The United States has signed and implemented multiple Free Trade Agreements with Latin American nations, and is currently negotiating with others, including Colombia and Panama.
The Common Market of the Southern Cone (MERCOSUR) was established in 1991 to encourage economic cooperation among the countries of South America. Products put together in the MERCOSUR can circulate without tariffs if no more than 40 percent of the export value of the final good is made of materials originating in a fellow MERCOSUR country. The organization was originally made up of Brazil, Argentina, Uruguay, and Paraguay, with Chile and Bolivia as associate members. Venezuela became a full member in 2006. Other associate members now include Mexico, Peru, Colombia and Ecuador. The MERCOSUR is also negotiating agreements with India and more than 30 other nations.
Mexican trade policy is among the most open in the world, with 43 total Free Trade Agreements including those with the United States, Canada, the EU, and Israel. Mexico's emphasis on foreign trade has made it one of the world's top 20 importers and exporters. The United States remains Mexico's principal trading partner and investor, with the European Union and Japan following in second and third place. Mexico is the only country besides Israel which has Free Trade Agreements with the two largest markets in the world - Europe and North America.
According to the USTR, important progress is being made on a bilateral trade deal between the United States and Panama. U.S. businesses are hoping the agreement will contain a strong government procurement package that would give them a fair opportunity to work on the upcoming expansion of the Panama Canal. In 2007, two-way trade between the U.S. and Panama totaled over $4.1 billion.
Additional Information