5 North American Free Trade Agreement, in addition to amendments to the AMF agreement under the North American Free Trade Agreement, all tariffs on textiles and clothing traded between Canada, Mexico and the United States will be eliminated by January 1, 2004. n The first exit from tariffs, which came into force on 1 January 1994, was abolished in Mexico tariffs on almost 50% of all industrial products. n By 1999, 65% of all U.S. manufactured goods exported to Mexico will arrive in Mexico duty-free. n NAFTA strengthens Mexico`s position as the leading supplier of textiles and apparel products imported to the United States6. 2 What is NAFTA? Definition: A trade agreement between the governments of Mexico, Canada and the United States to remove barriers to trade between them. Important documents: -North American Free Trade Agreement (with preamble, 22 chapters, 7 annexes and articles) – Procedure Forms 3 Uruguay Round Agreement n The Uruguay Round Agreement replaces the multi-fibre agreement. N The Uruguay Round agreement aims to liberalize trade in textiles and clothing by enabling market forces to guide consumption and production choices. n Uncontrolled products could develop more rapidly during the transition period. n Many of these imports will come from low-cost countries that can easily penetrate and overload the U.S. market. 6 benefits of membership – allows 450 million people, Reducing inflation (reducing import costs) creates agreements on international duties for business leaders – reduces trade costs (high profits and growth in small businesses) – increased trade in all goods and services (responsible for $1.6 trillion in goods and services per year) – increases THE reduction in GDP – foreign direct investment (if a person or business owns more than 10% or more) of oil and food prices 21 n The North American Free Trade Agreement, which has already led to a significant increase in trade between the United States, Canada and Mexico, is likely to negotiate free trade agreements with other countries in the future.