History

19th Century› nations prospered through trade with one another › little restrictions

Early 20th century› Walt Street Crash › economic growth took a staggering halt › many nations turned to protectionism› Trade decreased dramatically › World Wars left much of Europe and Japan struggling to

feed its people› Many countries desperately awaited the renewal of

trade

History Cont´d 1948

› General Agreement on Tariffs and Trade› 23 countries came together to form an agreement to reduce

customs, tariffs, and other restrictions on open markets› Formed rules for employment, commodity agreements,

restrictive business practices, international investments, and services

› Abolished Billions of $ of tariffs & dramatically increasing international trade

In 1995, › World Trade Organization was created to replace GATT› It had clearer guidelines for encouraging the liberalization of

trade and more power to enforce the rules regarding free trade among nations

› Approximately 150 nations - members› Seek to promote free trade in a way that benefits its members

Reasons for Forming FTA

Countries have varying degrees of resources › raw materials, technological infrastructure, and educated

workers Some countries can produce certain goods or services

cheaper or more efficiently than others Free trade agreements allow countries to specialize in

producing the good or service they are best at while obtaining other goods or services that other countries produce more efficiently at lower prices

Free trade agreements give countries access to foreign markets, because without the reduction in trade barriers they would be unable to compete as well in the other country

Countries are enabled to benefit from economies in scale in that they are now producing a much larger quantity to satisfy the demands of the other country, causing the cost /unit to decrease

Reasons for Forming FTA It strengthens the competition of the domestic market and

prevents the formation of monopolies and oligopolies› New competition from another country forces domestic

competitors to become more efficient in order to compete

Increases the overall well-being of its citizens by increasing economic growth and lowering the cost of living› Trade increases the number and quality of jobs available › Since there are no tariffs, taxes, and other trade

restrictions, prices of goods are decreased, allowing people to obtain more for the money and have more options to choose from

List Of Free Trade

There are different types of agreements that may occur in the free trade agreements. A trade bloc or group of nations that choose to conduct business.

Within this typeof agreement that each chain between customs unions, MSMAcommercial market area, these are usually signed between neighboring countries, but there are exceptions such as the WTO agreements. As also the TPP following negotiations that can be said to be regional, but not from neighboring countries.

Qualifying for a FTA

It is very important to be taken into account for a free trade agreement, which must have as much information as possible about the providers in the supply chain. When you have the information from suppliers, verifying the eligibility of products according

To the  rules of origin Number Harmonized products. In Each FTA product importers are classified in different ways, but the basis of qualification around the idea that the end product must have a minimum percentage of national or regional content.

Qualifying for a FTA At the signing of each free trade agreement signed, apply certain

rules and qualification standards include de minimis, regional value, and change of tariff.

 -De minimis states that a good finish will not be disqualified from preferential treatment if the contents do not originate in the finished product is 7% or a reduced value of transaction of goods on an FOB basis.

- Is a percentage that is calculated on the value of the product that represents the contents of North America

 -Shift duty is a substantial change that is created in a NAFTA country

NAFTA

This will start on 1 January 1994, the Free Trade Agreement between the United States, Canada and Mexico (NAFTA) came into force.

All other duties and quantitative restrictions were eliminated, as planned on January 1, 2008., Is the largest area of free trade throughout the world which now links 450 million people producing $ 17 trillion worth of goods and services.

The United States has 918 billion in total (two ways) trade in goods with NAFTA countries (Canada and Mexico) in 2010. Exports of goods amounted to 412 billion U.S. dollars, imports of goods amounted to 506 billion U.S. dollars. The U.S. deficit with NAFTA trade in goods was $ 95 million in 2010.

Sources: http://www.ustr.gov/

NAFTA U.S. foreign direct investment (FDI) in NAFTA Countries (stock) was $357.7

billion in 2009 (latest data available), up 8.8% from 2008.

The United States has $918 billion in total (two ways) goods trade with NAFTA countries (Canada and Mexico) during 2010.  Goods exports totaled $412 billion; Goods imports totaled $506 billion.  The U.S. goods trade deficit with NAFTA was $95 billion in 2010

 The top export categories (2-digit HS) in 2010 were:  Machinery ($63.3 billion), Vehicles (parts) ($56.7 billion), Electrical Machinery ($56.2 billion), Mineral Fuel and Oil ($26.7 billion), and Plastic ($22.6 billion).

Sources:http://www.ustr.gov/

Economic - Cons in Latin America

Economy situation in the country Economic crisis Not expect the free trade is the

economic solution that need the country

Companies entering Latin American countries which offer jobs to pay lower wages and require longer working hours

Cultural

Change traditions that have the country by others who are allied country

Social

Favoring some classes Little help to buy the domestic product

Conclusions

That happened in Latin America is associated with predictions of what he says based trade theory that there are always winners and losers.

FTAs are not the only economic solution for countries with greater opportunities.

Free trade treaties are not miraculous