Doing Business with NAFTA (North American Free Trade Agreement)

The status of economic super power is an outcome of three countrys integrated efforts and harmony of North Americans, specially USA maintained with world and focus on business, technology and infrastructure.

Learning Values:
After reading this chapter the reader will have an understanding on: 1. The member nations and the essence of NAFTA. 2. Intra trade and external trade of NAFTA members. 3. Indias trade with NAFTA. 4. Success of Indian business in NAFTA. 5. Future potential for co-operation and prosperity. 6. Current developments.

Members of NAFTA:
In January 1994, Canada, the United States and Mexico launched the North American Free Trade Agreement (NAFTA) and formed the world's largest free trade area. The North American Free Trade Agreement (NAFTA) is a comprehensive trade-liberalization agreement among Canada, Mexico, and the United States. NAFTA progressively eliminates most tariff and non tariff barriers to trade between these countries over a transition period that began on January 1, 1994 and concludes on January 1, 2008. The agreement also facilitates cross-border investment, requires that sanitary and phytosanitary standards for trade be scientifically based, and expands cooperation regarding the environment and labor. The Agreement has brought economic growth and rising standards of living for people in all three countries. In addition, NAFTA has established a strong foundation for future growth and has set a valuable example of the benefits of trade liberalization. It also strengthened the rules and procedures governing trade and investment throughout the continent. The member countries of the North American Free Trade Agreement (NAFTA) form the world's largest trading bloc, with a gross domestic

product (GDP) of US$ 12 trillion, or one third of the world's total GDP. The three countries have enjoyed a burgeoning relationship stemming from their decision to open doors and break down barriers. Markets continue to open up to a freer flow of goods, services and investments, and the economies are becoming more integrated than ever.

Objectives of NAFTA:
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 substantially investment opportunities in the territories of the Parties; 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 for the resolution of disputes; and f) Establish a framework for further trilateral, regional and multilateral cooperation to expand and enhance the benefits of this Agreement.

Labour Policies and the Environment:

The economic integration promoted by NAFTA has spurred better environmental performance across the region. Through the North American Agreement on Environmental Cooperation, the three partners are promoting the effective enforcement of environmental laws. Through the Commission for Environmental Cooperation (CEC), which was created from the NAFTA, all three countries have benefited from coordination which is increasing the effectiveness of North American conservation efforts by: - Developing common priorities for the protection of certain species - Developing North American Conservation Action Plans for three shared marine species - Providing tools such as a map of terrestrial eco regions which management agencies are using in their programs

- Setting out common mechanisms for planning and monitoring bird conservation programs Through the North American Agreement on Labour Cooperation, members are working together to protect, enhance and enforce basic workers rights. The NAFTA also establishes institutions and creates a formal process through which the public may raise concerns about labor law enforcement directly with governments. NAFTA partners have undertaken a wide-range of cooperative programs and technical exchanges on industrial relations, occupational safety and health, child labor, gender equality, and protection of migrant workers.

CANADA

Capital: GDP (purchasing power parity): GDP (official exchange rate): GDP - real growth rate:

Ottawa $1.165 trillion (2006 est.) $1.089 trillion (2006 est.) 2.8% (2006 est.)

Industries:

Exports: Exports - commodities:

Exports - partners: Imports: Imports - commodities: Imports - partners: Currency (code): Airports - with paved runways: Railways: Roadways: Ports and terminals:

transportation equipment, chemicals, processed and unprocessed minerals, food products, wood and paper products, fish products, petroleum and natural gas $405 billion f.o.b. (2006 est.) motor vehicles and parts, industrial machinery, aircraft, telecommunications equipment; chemicals, plastics, fertilizers; wood pulp, timber, crude petroleum, natural gas, electricity, aluminum US 84.2%, Japan 2.1%, UK 1.8% (2005) $353.2 billion f.o.b. (2006 est.) machinery and equipment, motor vehicles and parts, crude oil, chemicals, electricity, durable consumer goods US 56.7%, China 7.8%, Mexico 3.8% (2005) Canadian dollar (CAD) 509 48,467 km 1,042,300 km Fraser River Port, Halifax, Montreal, Port Cartier, Quebec, Saint John's (Newfoundland), Sept Isles, Vancouver

Canada with a land area of almost 3.6 million square miles is second in size only to Russia. The country is divided into 10 provinces and three territories.. Canada typically had a positive balance of payment, thanks to its food, energy and motor vehicle exports. Canadas primary trading partner is US. Canadas economic growth has been historically based on the export of agricultural staples, especially grains and on the production and export of natural resource products such as mineral, oil, gas and forest products. Major secondary industries have also emerged and now Canada ranks among the top 10 manufacturing nations of the world. Service industry is also expanding rapidly, especially financial services in Toronto. Almost 80% of manufacturing activity s located in Ontario and Quebec including the entire motor vehicle industry, which is Canadas largest segment, while Calgary has now become a major high tech centre. Almost one quarter of all Canadas exports and imports are in autos and auto related products. . Canadas growth was helped by large inflows of FDI, today 40 percent of the primary and secondary industries are foreign owned.

As an affluent, high-tech industrial society in the trillion-dollar class, Canada resembles the US in its market-oriented economic system, pattern of production, and affluent living standards. Since World War II, the impressive growth of the manufacturing, mining, and service sectors has transformed the nation from a largely rural economy into one primarily industrial and urban. The 1989 US-Canada Free Trade Agreement (FTA) and the 1994 North American Free Trade Agreement (NAFTA) (which includes Mexico) touched off a dramatic increase in trade and economic integration with the US. Given its great natural resources, skilled labor force, and modern capital plant, Canada enjoys solid economic prospects. Exports account for roughly a third of GDP. Canada enjoys a substantial trade surplus with its principal trading partner, the US. Canada is the US' largest foreign supplier of energy, including oil, gas, uranium, and electric power.

Canadas industrial climate

The Canadian economy is characterized by private enterprise. However some industries, such as broadcasting and public utilities, are government owned or subject to substantial government regulation.. Small business is a major part of the economy and accounts for almost 80 % of all new employment in manufacturing. The service and retail trade industries are characterized by a large number of industries that vary in size. 70 % of Canadians work in service industries.

Export and Imports

Export permits are required for the shipment of goods having strategic value, such as uranium. They are also required to implement the provisions of various international agreements into which Canada has entered. Import documentation is also required, as well as payment of goods and sales tax (GST value added tax). This tax is collected by Canadian customs, which is 7 % of the value of the goods plus any import duties.

Banking and finance

Banks in Canada offer a full range of financial services. There are six large Canadian chartered banks with extensive national branch networks that account for 90 % of nations banking industry assets. There are also many

small banks (foreign owned), these bank respond to the action of central bank. Banks operate within the confines of the bank act.

Labor Relation
Labor relations are governed by both Federal and provincial labor legislation. The Canada labor court is the federal law that covers such matters as wages, employment practices, work safety and conciliation in the event of labor disputes. Provincial government has similar laws to cover employer-employee relations at local level.

Investments
The Investment Canada Act (ICA) was designed to create a welcome climate for foreign investment by significantly loosening previous restrictions (30 June 1985). Investment in certain industries is restricted for example a license to operate a broadcasting station can be granted only to a Canadian citizen or corporation whose stock is 80 %. Under ICA a non Canadian wishing to acquire a Canadian firm must make an application to ICA for review and approval, if the assets are valued more than 5 million dollars or the business relates to Canadas cultural heritage or national heritage. There are numerous provincial statues that place restrictions on foreigners seeking to invest in particular industries or activities, for example, individual have to be Canadian resident for at least a year in order to be registered securities dealer. Similarly, who are registering ownership of land must disclose their citizenship.

Business opportunities in Canada

Use of product standards as a trade barrier is prohibited and national treatment of testing labs and certification bodies is established. Many restrictions on agriculture products, wine and distilled spirits, auto parts and energy goods have been sharply reduced if not totally eliminated. The size of the government procurement markets that will be opened to suppliers from the other countries is slightly increased. Travel by business investors, visitors, traders, professional and executives transferred intra company is facilitated. The opportunity to make investments in each others country is facilitated and encouraged through the adaptation of national treatment.

Marketing in Canada
Companies doing business in Canada need to know the distribution practices and advertising and promotional channels. In many cases these are similar to those of other countries, but there are some important differences.

Distribution practices
Despite the countrys vast size, sales to Canadian industries are characterized by short marketing channels with direct producer- to- user distribution. Many Canadian industries are dominated by few large scale enterprises that are highly concentrated geographically. It is not unusual for 90 % of perspective customers for an industrial product to be located in or near two or three cities. Consumer goods market is more diffused than the industrial markets, and the use of marketing intermediaries is often necessary. Firms having only one representative or distribution point typically chose Toronto. The market is divided into three areas; distributors are frequently putting Montreal, Ontario and Vancouver. Direct selling is another growing area. This includes the sale of goods from manufacturing premises, by mail through home delivery, through personal selling and through non retail channels. Wholesale and retail trade is also important forms of distribution. Because of the wide dispersion of customers, wholesale trade is critical.

Exporting
One of the most popular ways of doing business in Canada is through exports. Canada is USs largest market. Every year Canada buy as much US goods as do all the member nations of EU combined. In recent years the Canadian government has simplified the process of shipping goods into the country.

Franchising
Canada is dominant foreign market for US franchisers. Currently there are more than 300 US franchise firms operating approximately 10000 franchising units in Canada. In recent years Canadian banks have become more responsive to the needs of franchise operations. Canadian chartered banks now offer various loans and repayment plans and also offer payroll and cash management services for franchises.

Ease of... Doing Business Starting a Business Dealing with Licenses Employing Workers Registering Property Getting Credit Protecting Investors Paying Taxes Trading Across Borders Enforcing Contracts Closing a Business

2006 rank 4 1 32 13 22 7 5 22 8 16 5

2005 rank 4 1 32 12 25 7 5 21 8 15 4

Change in rank 0 0 0 -1 +3 0 0 -1 0 -1 -1

International rankings
Organization A.T. Kearney/Foreign Policy Magazine IMD International The Economist Yale University/Columbia University Reporters Without Borders World-wide Transparency International Heritage Foundation/The Wall Street Journal The Economist Survey Globalization Index 2005 World Competitiveness Yearbook 2005 The World in 2005 - Worldwide quality-of-life index, 2005 Environmental Sustainability Index, 2005 (pdf) Press Freedom Index 2006 Corruption Perceptions Index 2005 Index of Economic Freedom, 2007 Global Peace Index Ranking 6 out of 111 5 out of 60 14 out of 111 6 out of 146 16 out of 168 14 out of 159 10 out of 161 8 out of 121

INDIAS TRADE WITH CANADA

Indias exports to Canada:
In 2005-06 Indias Export to Canada was 1,021.58 million US$ which was 0.9909 percent of India's Total Export in that year. This was 17.86 percent increase from the last year. India exports readymade garments, textiles, cotton yarn, carpets, floor spreads, gem & jewellery & precious

stones, organic chemicals, coffee, spices, light engineering goods, iron & steel articles, footwear and leather products, rice, cereals, processed foods and marine products to Canada. India's major items of import from Canada include newsprint, wood pulp, asbestos, potash, peas, iron scrap, copper, minerals and industrial chemicals. Some of the major items exported to Canada are: MAJOR ITEMS
DIAMONDS - NON-INDUSTRIAL - WORKED NOT MOUNTED OR SET T-SHIRTS, SINGLETS AND OTHER VESTS KNITTED - COTTON ARTICLES OF JEWELLERY - PRECIOUS METALS (OTHER THAN SILVER) SHRIMPS AND PRAWNS - FROZEN OTHER HETEROCYCLIC COMPOUNDS NES (INCLUDING MORPHOLINE, SULTONES, SULTAMS AND NUCLEIC ACIDS) WOMENS/GIRLS BLOUSES, SHIRTS AND SHIRTBLOUSES - WOVEN - COTTON MEN'S/BOYS SHIRTS - KNITTED - COTTON MENS/BOYS SHIRTS - WOVEN - COTTON WOMENS/GIRLS SKIRTS AND DIVIDED SKIRTS WOVEN - COTTON PARTS OF TAPS, COCKS, VALVES OR OTHER SIMILAR APPLIANCES

2004
67857477 33917644 15986215 30347048 4307830 13888889 22970511 20030123 3741523 16739479

(In US$) 2005 2006

8155327 8 114848018 3557336 0 45302344 1755940 4 37247906 2850780 6 35017275 1138162 1 1762161 8 2024915 1 2193245 5 1615299 4 1898549 5 29200730 21651083 20557802 20110918 19250698 18319068

Indias imports from Canada:

In 2005-06 Indias import from Canada was 919.87 million US$ which was 0.6167 percent of India's Total import in that year. This was 18.58 percent increase from the last year. (In US$) MAJOR ITEMS 2004 2005 2006
NEWSPRINT - IN ROLLS OR SHEETS COPPER ORES AND CONCENTRATES PEAS - DRIED AND SHELLED POTASSIUM CHLORIDE 122092891 10931576 74731438 69182316 155405417 38986198 132367480 114647461 179363996 131689853 118482710 104473822

HELICOPTERS OF AN UNLADEN WEIGHT (MORE THAN 2,000 KG) SEMI-CHEMICAL WOOD PULP CHEMICAL WOODPULP - SODA OR SULPHATE - CONIFEROUS, BLEACHED PARTS OF ELECTRICAL APPARATUS FOR LINE TELEPHONE OR LINE TELEGRAPHY NICKEL - UNWROUGHT, NOT ALLOYED ASBESTOS

8288574 30830553 16574816 11033491 12343673 28415254

15140204 25074852 21071509 20588372 10917299 25034180

51845002 50289796 36241932 34134104 29300703 28155402

UNITED STATES OF AMERICA

Capital:

Washington, DC (capital)

GDP (purchasing power parity): GDP (official exchange rate): GDP - real growth rate: Industries:

Exports: Exports - commodities:

Exports partners Imports: Imports - commodities:

Imports - partners: Currency (code): Airports - with paved runways: Railways Roadways: Ports and terminals:

$12.98 trillion (2006 est.) $13.22 trillion (2006 est.) 3.4% (2006 est.) leading industrial power in the world, highly diversified and technologically advanced; petroleum, steel, motor vehicles, aerospace, telecommunications, chemicals, electronics, food processing, consumer goods, lumber, mining $1.024trillionf.o.b.(2006est.) Agricultural products (soybeans, fruit,corn)9.2%, industrial supplies (organic chemicals) 26.8%, capital goods (transistors, aircraft, motor vehicle parts, computers, telecommunications equipment) 49.0%, consumer goods (automobiles, medicines) 15.0% (2003) Canada23.4%,Mexico13.3%,Japan6.1% $1.869 trillion f.o.b. (2006 est.) agricultural products 4.9%, industrial supplies 32.9% (crude oil 8.2%), capital goods 30.4% (computers, telecommunications equipment, motor vehicle parts, office machines, electric power machinery), consumer goods 31.8% (automobiles, clothing, medicines, furniture, toys) (2003) Canada16.9%,China15%,Mexico10%,Japan8 % US dollar (USD) 5,119 226,605 km 6,430,366 km Corpus Christi, Duluth, Hampton Roads, Houston, Long Beach, Los Angeles, New Orleans, New York, Philadelphia, Tampa, Texas City

The US has the largest and most technologically powerful economy in the world, with a per capita GDP of $43,500. In this market-oriented economy, private individuals and business firms make most of the decisions, and the federal and state governments buy needed goods and services predominantly in the private marketplace. US business firms enjoy greater flexibility than their counterparts in Western Europe and Japan in decisions to expand capital plant, to lay off surplus workers, and to develop new products.

At the same time, they face higher barriers to enter their rivals' home markets than foreign firms face entering US markets. US firms are at or near the forefront in technological advances, especially in computers and in medical, aerospace, and military equipment; their advantage has narrowed since the end of World War II. The onrush of technology largely explains the gradual development of a "two-tier labor market" in which those at the bottom lack the education and the professional/technical skills of those at the top and, more and more, fail to get comparable pay raises, health insurance coverage, and other benefits. Imported oil accounts for about two-thirds of US consumption. Long-term problems include inadequate investment in economic infrastructure, rapidly rising medical and pension costs of an aging population, sizable trade and budget deficits, and stagnation of family income in the lower economic groups. The merchandise trade deficit reached a record $750 billion in 2006.

Finance
The U.S. banking market comprises several types of financial institutions, including commercial banks, investment banks, savings banks, savings and loan associations and credit unions. In addition, specialized institutions, including leasing companies, finance companies and factoring companies, offer asset-based financing. Commercial banks supply the most funds to businesses. Short-term financing is usually arranged as a line of credit.

Communications and transportation

The nation has a comprehensive network of internal and external communications systems, which includes all forms of wired connections, almost 100 percent universal coverage for cellular technologies and a quickly growing implementation of wireless networks

Regulatory environment
The U.S. regulatory environment is a combination of open competition and consumer protection. For a business that is specifically intrastate (within one state), such as a restaurant, all regulatory powers reside within the state and its local governmental units. It is important to verify any regulatory information because laws and legal interpretation of the laws are frequently modified.
Ease of... Doing Business 2006 rank 3 2005 rank 3 Change in rank 0

Starting a Business Dealing with Licenses Employing Workers Registering Property Getting Credit Protecting Investors Paying Taxes Trading Across Borders Enforcing Contracts Closing a Business

3 22 1 10 7 5 62 11 6 16

3 18 1 10 7 5 55 10 4 16

0 -4 0 0 0 0 -7 -1 -2 0

INDIAS TRADE WITH USA

In 2005-06 Indias Export to USA was 17,353.06 million US$ which was 16.8328 percent of India's Total Export in that year. This was 26.06 percent increase from the last year. India's main exports to US are precious stones, metals (worked diamonds & gold jewellery), Woven apparel, Knit apparel, miscellaneous textile article, Fish and seafood (frozen shrimp), Textile floor coverings, Iron/steel products, Organic chemicals and Machinery (taps, valves, transmission shafts, gears, pistons, etc) MAJOR ITEMS
DIAMONDS - NON-INDUSTRIAL - WORKED NOT MOUNTED OR SET ARTICLES OF JEWELLERY - PRECIOUS METALS (OTHER THAN SILVER) OTHER FLAT ROLLED PRODUCTS NES IRON/NON-ALLOY STEEL (WIDTH >600MM) PLATED/COATED WITH ZINC WOMENS/GIRLS BLOUSES, SHIRTS AND SHIRT-BLOUSES - WOVEN - COTTON COTTON TERRY TOWELS AND HOUSEHOLD LINEN OF COTTON TERRY FABRICS SWEATERS, SWEATSHIRTS AND WAISTCOATS - KNITTED - COTTON MEN'S/BOYS SHIRTS - KNITTED - COTTON HEAVY PETROLEUM OIL PREPARATIONS BEDSHEETS, PILLOWCASES AND BED LINEN (INCL SETS) - WOVEN, NOT PRINTED -

(In US$) 2004 2005

285166135 0 142618701 9 462064375 306184600 194358172 202622832 139359998 121148438 149154918

2006

307955168 2 3256065523 167628003 2 2308507783 246552857 336494491 247302060 270871452 215201065 400441746 211578998 509916724 373569165 315279301 299329902 294374386 290012993 264483994

COTTON WOMENS/GIRLS SKIRTS AND DIVIDED SKIRTS - WOVEN - COTTON

81596011

281198633

248722347

Indias imports from USA:

In 2005-06 Indias import from USA was 9,454.74 million US$ which was 6.3384 percent of India's Total import in that year. This was 35.04 percent increase from the last year. India imports sophisticated machinery (computers and components, gas turbines, telecom, etc), Electrical machinery (recording/sound media), Medical and surgical equipment/instruments, Aircraft, spacecraft (small aircraft), Precious stones, metals (diamonds, not mounted or set), jewellery, Organic chemicals, Plastic, Cotton and cotton waste and Wood pulp, etc. (In US$) MAJOR ITEMS 2004 2005 2006
AIRCRAFT NES OF AN UNLADEN WEIGHT (MORE THAN 15,000 KG) DIAMONDS - NON-INDUSTRIAL - WORKED NOT MOUNTED OR SET FERTILIZERS (CODE VALID ONLY FOR U.S. EXPORTS) ARTICLES OF JEWELLERY - PRECIOUS METALS (OTHER THAN SILVER) OILS/OTHER PRODUCTS OF THE DISTILLATION OF HIGH TEMP COAL TAR;SIM PRODUCTS,NES PARTS OF ELECTRICAL APPARATUS FOR LINE TELEPHONE OR LINE TELEGRAPHY OTHER AUTOMATIC DATA PROCESSING MACHINES, PRESENTED IN THE FORM OF SYSTEMS ALMONDS - IN SHELL PARTS OF BORING OR SINKING MACHINERY (WHETHER OR NOT SELF-PROPELLED) AIRCRAFT LAUNCHING GEAR, DECK ARRESTORS AND SIMILAR GEAR 228369178 365183207 118700591 142417976 113832364 91397484 83598237 67090325 86606449 61119274 46753935 4 1313325729 43073517 0 589396743 42374422 4 586668998 20764216 5 256454410 98948109 10380566 7 11325216 6 94346274 98534035 59846878 217565760 125817572 124137976 114296938 112298619 105789025

UNITED MEXICAN STATES

Capital: GDP (purchasing power parity): GDP (official exchange rate): GDP - real growth rate: Industries: Natural resources: Exports: Exports commodities: Exports partners: Imports: Imports - commodities:

Mexico (Distrito Federal) $1.134 trillion (2006 est.) $741.5 billion (2006 est.) 4.5% (2006 est.) food and beverages, tobacco, chemicals, iron and steel, petroleum, mining, textiles, clothing, motor vehicles, consumer durables, tourism petroleum, silver, copper, gold, lead, zinc, natural gas, timber $248.8 billion f.o.b. (2006 est.) manufactured goods, oil and oil products, silver, fruits, vegetables, coffee, cotton US 85.7%, Canada 2%, Spain 1.4% (2005) $253.1 billion f.o.b. (2006 est.) metalworking machines, steel mill products,

Imports - partners: Currency (code): Airports - with paved runways: Railways: Roadways: Ports and terminals:

agricultural machinery, electrical equipment, car parts for assembly, repair parts for motor vehicles, aircraft, and aircraft parts US 53.4%, China 8%, Japan 5.9% (2005) Mexican peso (MXN) 228 17,562 km 235,670 km Altamira, Manzanillo, Morro Redondo, Salina Cruz, Tampico, Topolobampo, Veracruz

It is third largest nation in Latin America. The country federal democratic republic divided into 31 states and the Federal District (Mexico City) Mexico has a free market economy that recently entered the trillion dollar class. It contains a mixture of modern and outmoded industry and agriculture, increasingly dominated by the private sector. Per capita income is one-fourth that of the US; income distribution remains highly unequal. Trade with the US and Canada has tripled since the implementation of NAFTA in 1994. Mexico has 12 free trade agreements with over 40 countries including, Guatemala, Honduras, El Salvador, the European Free Trade Area, and Japan, putting more than 90% of trade under free trade agreements.

Labor
Labor is relatively plentiful and inexpensive. However, although there are numerous engineers, MNEs report a serious shortage of skilled labor and managerial personnel, particularly at the middle and upper levels of the organization. DEMOGRAPHY AND SOCIAL INDICATORS

Petroleum cluster
1. The country has second largest proven oil reserve after Venezuela and is the world fifth largest producer. The largest firm is the state owned Petroleos Mexicanos (PEMES) which is the worlds largest crude oil producer (does not include refining). The company has a work force of 135000 employees and assets of nearly 60 billion dollars including pipelines, refineries, tankers, aircrafts and railcars. The commodity nature of the energy business provides little opportunity to insulate itself from the cyclical changes of both pricing and demand in this cluster.

Automotive cluster
The global auto industry is currently undergoing worldwide restructuring. In this process Mexico is emerging as a major car and truck producer. Over the last decade the big three US automakers have been expanding their capacities in Mexico while closing the plants in US and Canada. At the same time European and Japanese firms are investing in Mexico, in effort to tap such low-cost, low capital cost, proximity to largest auto market in the world, growth of domestic demand, and accessibility to related support industries. Mexico has strong, rich resources base supporting its automotive cluster. There is an abundance of young, skilled, adaptable labor. Foreign auto firms are finding that these workers are particularly effective after they have been given training in total quality management, just in time delivery and related concepts. In addition, unions in Mexico are much, more cooperative with management than their counterparts in the north. As a result, this resource base is now producing some of the highest quality cars

and trucks in North America, and the Hermosillo plant is widely regarded as the number one auto factory on the continent.

Strategies for doing business with Mexico

1. Wholly owned subsidiary: This can be an expensive strategy, but it gives the company a total control and allows management to make quick and effective decisions. Quiet often a local manager runs the subsidiary and almost always the majority of management team is locals. However headquarters exercises the key control. 2. To become part of Maquiladora program: This strategy works best for the firms aiming to export most of their output back to US. The Maquiladora arrangements allows manufacturing, assembling and processing plants to import the materials, components, and equipments duty free, complete the work with Mexican labor and then ship the finished products. Under recent changes company can sell one third of the output in Mexico and still be the member. 3. Shelter program: Under this agreement local contractors assume responsibility for all aspects of manufacturing operations from site selections to recruitment of personnel to run the factory. After a predetermined time, however the US Company can buy out the shelter operator at a present price and take over the business. 4. Joint Venture This combines foreign company with financial and manufacturing know how and local partner who knows how to market the output. Number of US firms has opted for this approach including Ford, DuPont and GE.
Ease of... Doing Business Starting a Business Dealing with Licenses Employing Workers Registering Property Getting Credit Protecting Investors Paying Taxes Trading Across Borders 2006 rank 43 61 30 108 79 65 33 126 86 2005 rank 62 93 28 110 73 59 133 128 77 Change in rank +19 +32 -2 +2 -6 -6 +100 +2 -9

Enforcing Contracts Closing a Business

87 25

82 21

-5 -4

Indias exports to Mexico:

In 2005-06 Indias Export to Mexico was 443.07 million US$ which was 0.4298 percent of India's Total Export in that year. This was 20.21 percent increase from the last year. Some of the major items of export are: MAJOR ITEMS
TRANSPORT EQUIPMENT DRUGS, PHARMA AND FINE CHEMICALS RMG OF COTTON INCL. ACCESSORIES INORGANI/ ORGANIC CHEMICALS MANUFACTURES OF METALS MACHINERY AND INSTRUMENTS ELECTRONIC GOODS MAN MADE YARN FABRIC MADE UPS RESIDUEL CHEMICAL AND ALLIED PRODUCTS DYES & INTERMEDIARIES ETC.

2003-04
27.10 76.96 41.91 14.15 12.09 11.20 5.73 8.14 1.30 6.61

(US$ million) 2004-05 2005-06

102.09 61.92 37.24 18.57 17.07 14.71 12.98 9.36 2.44 6.77 105.42 80.64 42.30 23.94 23.87 19.45 14.08 9.65 7.88 7.86

Indias imports from Mexico

In 2005-06 Indias import from Mexico was 97.61 million US$ which was 0.0654 percent of India's Total import in that year. This was 18.14 percent increase from the last year. Some of the major items of import are: MAJOR ITEMS
ARTICLES OF IRON OR STEEL ELECTRICAL MACHINERY AND EQUIPMENT AND PARTS THEREOF; SOUND RECORDERS AND REPRODUCERS, TELEVISION IMAGE AND SOUND RECORDERS AND REPRODUCERS,AND PARTS.

(US$ million) 2004-05 2005-06

4.21 15.04 4.18 30.23

% growth
-0.68 100.97

IRON AND STEEL NUCLEAR REACTORS, BOILERS, MACHINERY AND MECHANICAL APPLIANCES; PARTS THEREOF. OPTICAL, PHOTOGRAPHIC CINEMATOGRAPHIC MEASURING, CHECKING PRECISION, MEDICAL OR SURGICAL INST. AND APPARATUS PARTS AND ACCESSORIES THEREOF; ORES, SLAG AND ASH. ORGANIC CHEMICALS PLASTIC AND ARTICLES THEREOF.

3.63 11.31 2.63

7.1 15.22 3.99

95.3 34.58 52.07

4.28 26.27 3.13

4.11 10.04 5.97

-4.07 -61.78 90.46

IMPORTANCE TO INDIA
NAFTA has played important role in over all development of all the three nations. Progressive elimination of tariffs and trade barriers, disputes resolution, commitment to intellectual property and environmental legislation, as well as mutual entry into governmental bidding, financial and other service sectors. All the three countries have contributed to each other by its resources. United States contributes by supplying technology, services and data processing, medical and space research, and capital. Canada supplies minerals, forest products, energy, and technological expertise; and Mexico has a vast supply of labour, huge reserves of petroleum, and massive agriculture potential. The potential had increased in economic power and has been utilized not just in competing for regional markets of NAFTA, but in global markets as well. Its been a win-win situation for all the NAFTA nations.