6.1.3. Areas of trilateral cooperation

The agreement enables the practical solution of the important issues of mutual cooperation, including:

• in the field of customs: According to the agreement, integrant countries took a substantial step toward the customs restrictions revocation - the U.S. by 84% and Canada by 79% of Mexican exports (excluding petroleum); Mexico liquidated customs restrictions by 43% of the U.S. goods and by 41 % of the Canadian goods. In 15 years these restrictions will be liquidated completely;

• in the field of investment: the implemented investment regime does not provide any restrictions on foreign investors (capital investors), however the convertibility of national currency and money transfer facilities abroad are guaranteed;

• in the industrial sector: the agreement calls for the creation of the most favored regime for local firms, some branches that under the Constitution are under the exclusive competence of the state are excluded out the Agreement field;

• in non-production sphere: the most favored regime in the relationship between the integrant countries is being implemented;

• In the financial sphere: the whole settlement system remains under state control, monetary policy and exchange rates, as well as the activities of social insurance and capital construction do not get under the NAFTA action.

The mechanism of institutions actions at tree levels (intergovernmental consultations, the commission of a free trade, arbitration) for solving disputes is agreed.

It should be noted that the functioning of such a powerful trade union as NAFTA that consists of three big countries, under the conditions of maintenance the open economic union, remains and even promises new opportunities for the development of bilateral relations in trade for "third" countries. However, significant reduction in customs duties within the union puts export of goods to NAFTA countries from the "third" countries in advance disadvantageous conditions.

6.2. The interests of parties in the integration process

Each of the three member countries of the North American integration process has its own economic interests in NAFTA and, of course, each of them hopes to realize these interests through a free trade zone.

U.S. believes through NAFTA, primarily:

• strengthen the"center" of North American economic power and its impact on the world economy;

• to expand the duty-free sales market of their own producers;

• consolidate the position of the national capital, TNCs in the economy of Mexico and Canada;

• increase access to Mexican and Canadian economic resources;

• through Mexico to strengthen influence on Latin America.

Canada through the participation in free trade zone aims to:

• get rid of protectionist restrictions imposed by U.S. law and thus increase the competitiveness of their goods manufacturers in the U.S. market;

• significantly increase the turnover with Mexico, which had been negligible earlier;

• through the U.S. and Mexico to enter the markets of the Latin American region;

• though the activation of the contacts within the integration union revive the economic situation in the country: to increase economic growth, expand the boundaries of employment.

Canada considers NAFTA as a “symbol of the further liberalization of trade and commercial law”. At the same time development of the integration process in North America Canada considers through the prism of the process of the World Trade Organization (WTO) formation and increased cooperation with the EU. It should be noted at the same time that North American Agreement on free trade from beginning to end is riddled with references to the principles of GATT-WTO.

Mexico that set the goal with the help of free trade zone intends to defend its interests in NAFTA:

• access to scientific and technical progress to create strong background for the modernization of the national economy;

• integrating to the world's largest free trade zone, Mexico relies on the favorable terms of exports of national producers in the U.S. and Canada;

• special hopes were colligated to additional investments and new technologies in national production that will provide a significant increase in the number of jobs, increasing competitiveness of national production of goods.

In the context of global integration, the participation of Mexico in NAFTA strengthens its position in the global community with its complex process of regrouping of forces between the main economic centers of the world. Of course, Mexico's membership in NAFTA strengthens the North American orientation of its economy. At the same time policy of diversification of economic relations, which consistently is led by Mexico, gives reason to believe that country is not threaten by regional isolation, that such a policy will not affect the desire to expand trade with other countries and regions worldwide. EU-Mexico fruitful cooperation in the regime of free trade according to the Agreement, signed in March 2000 can be its submission. EU-Mexico FTA entered into force on July 1, 2000.

Feature of NAFTA is that it is trade integration groupings that combines three countries with different economic, scientific and technical potential: two global giants, members of the "Group of Seven - the United States and Canada, and one of the countries (although the large" Hispanic Jaguar"), which still belongs to former "Third World ". Mexico in the negotiations regarding the FTA has gained recognition of differences in levels of the Mexican economy in comparison with North American and Canadian economies, and thus were able to cooperate with NAFRA partner for 15 years on concessional terms.

As a result:

• Mexico for 15 years will enjoy benefits in reforming of the customs system concerning partners in NAFTA;

• Mexico is granted more preferential taxation order of its exports;

• Mexico is guaranteed the full sovereignty of the oil industry: Government of Mexico has the exclusive right to dispose of oil and gas reserves, petroleum products and petrochemicals;

• Mexico is granted duty-free regime of car export to U.S. and Canadian;

• U.S. and Canada has also weakened the regime of customs taxation of Mexican agricultural exports.

In connection with the accession of Mexico to NAFTA the strengthen of North American orientation of the economy wasn’t excluded.

At the same time its intention to North American integration process suggest that within the policy of diversification of economic relations and based on pragmatic considerations, Mexico will not stop on self-free trade zone, and will seek to expand trade with other countries and regions. After all, Mexico active emphasizes the open character of NAFTA.

The fact that Mexico gradually creates "its own free trade area" with its neighbors in Central America can serve as a proof of this. In 1994, in particular, there was signed a free trade agreement with Costa Rica. Similar agreements have been concluded with Nicaragua - 1997, with Guatemala, Honduras and El Salvador – 2000. In March 2000, there was signed a free trade agreement between Mexico and the European Union, which significantly strengthened the position of Mexico in the region and in relations with partners in NAFTA. In addition, it means that the interests of three members of the North American integration process is represented in Western Europe. If one add to this that NAFTA is represented in the full structure by membership in APEC, we can judge the level of its impact on the world economic system.

For the years of joint integrating development under the influence of free trade the subjects of trilateral agreement feel the fundamental changes. For the U.S. the participation in the continental integration process becomes a powerful, dynamic factor in long-term positive impact on domestic economic development. It’s envisaged that in future, at least the nearest, the positive trends under the influence of this factor will be stored. The prognoses regarding the need of continental integration complex for USA to improve the competitiveness against the main competitor – EU and Japan became true.

The new condition for Canada’s economic developed has formed in the process of the trilateral agreement with NAFTA realization. fundamentally new conditions for economic development in Canada. Tariffs reduction and increasing of access to the public supply helped to increase export. With new rules and procedures stipulated by the agreement that limited the impact of protectionism, an access of Canadian goods to the U.S. market has increased. The investment climate substantially improved, with that two thirds of total FDI in the Canadian economy are the U.S. investors. A clear definition of financial assistance programs in the form of subsidies to industry, agriculture, fishing has reduced the threat of countervailing duty. The volume of Canadian investments and exports to Mexico increased.

Integrating cooperation in NAFTA is characterized by apparent success in accelerating development of the bilateral Canada-US trade. Its annual turnover for the period 1994-2003 years increased 2 times. The trade balance surplus has increased in favor of Canada from $ 17.3 billion in 1994 to $ 84.9 billion in 2003. All the sectors of Canadian industry has increased export quota in total volume of their sales. In Canadian exports to the U.S. the share of industrial finished products and semi-finished goods is higher than in Canada's exports to other countries. U.S. share in Canadian export is over 80 percent, and in import is more than 60 percent.

In an investment sphere the rates of the direct Canadian accumulated investments in the USA attained 12,6%. At the same time the index of relation of volumes of the direct American accumulated investments in the Canadian economy to the volumes of GDP of Canada rose from 13,3% in 1994 to 19,8% at the beginning of 2000th[7,c.8]. One of the most developed forms of the Canadian-American integrating collaboration became integration of markets of capitals. Canadian corporate borrowers - financial, unfinancial transnational corporations - place about 40 % own bonds and almost 12 % new issues of equities at the market of the USA. Almost 40% profits the Canadian banks get from foreign activity in the USA. All members of the Canadian large five of banks consider expansion at the market of the USA the main strategic task [7, c.12-13].A continental power collaboration, which develops on law basis and regulated by the North-American working group from energy at the level of ministers of the USA, Canada and Mexico, became a general project and considerable achievement of North-American integration. A continental power collaboration is to a full degree consonant with the concept of sovereignty of three North-American countries. Part of Canada and Mexico in the petroleum import of the USA presents 34%[7, c.17].

Another general project which successfully will be realized in the conditions of integrating collaboration is related to a transport infrastructure of NAFTA. Motor-car highways, electric systems, railway infrastructure, interlaced so closely, that all grounds to examine them as the North-American continental infrastructure are. Unique the general project of building of transcontinental motorway is considered from Canada - by territory from the USA - to Mexico, completion of which is foreseen to 2020 year.

Under act of integrating collaboration the process of revivifying, forming of powerful economic regions, states-regions which bind the future to the incorporated continental economic space got distribution in NAFTA. On the role of such states-regions the provinces of Ontario and Quebec apply in Canada, and on transfrontal basis is the Pacific economic region in composition the American states and Canadian provinces of ocean coast.

Thus transformation of Canada became the result of integrating collaboration on inalienable part of the North-American economic complex on the basis of scale widespread continental division of productive process which goes to the change to the classic international division of labor. The continental division of productive process became, essentially, by a sign high-quality new level of international economic integration.

A collaboration within the limits of NAFTA for Mexico grew into the factor of speed-up economic increase due to investments in a national production, oriented mainly to the market of the USA. Under act of continental integration association Mexico began gradually integrated to the global economy. As a result - Mexico for short time transformed from one of most closed for foreign trade and investing of economies in one of most open. By means of NAFTA Mexico grew into the country-exporter of mainly eventual and intermediate products. Direct foreign investments in a mexican economy grew from $4-5 milliards in 1993 to $10 milliards in 1999 On the whole participating of Mexico in NAFTA sent her course in direction of such program of trade liberalization and restructuring of economy, walking away from which becomes doubtful, and returning to the economic isolation – practically impossible. An integrating collaboration in NAFTA did not prevent to Mexico during the last fifteen years to conclude and successfully realize Agreements about free trade with European Union, MERCOSUR, Japan, Andes Commonwealth and other partners. Under act of integrating collaboration with partners for NAFTA, and foremost with the United States, Mexico grew into the active subject of international economic relations, influential participant in processes which take place in the globalized world economy. At the same time it remains noticeable enough her integration dependence on the USA.

Table 6.2.1.

Direct foreign investments in the economy of Mexico* ( bn $)

Years	NAFTA	USA	Canada	EU
1995	4,37	4,21	0,17	1,78
1997	6,16	5,93	0,23	3,10
1999	8,07	7,44	0,63	3,87
2001	22,43	21,41	1,02	6,21
2003	9,54	9,28	0,26	6,21
2006	11,55	11,02	0,53	6,35

*Latin America, 2008, №12, с.29

Membership in NAFTA assisted the improvement of main macroeconomic indexes. The middle rates of increase of GDP in 2006 year attained the mark of 4,8% as compared to 2% in 1993 years. After the rates of increase of export Mexico began notedly to pass ahead the countries of the Ibero-American region : her specific gravity in the combined export of Latin America for a decade 1996-2006 grew from 34% to 49%.

In the same period friendly to the mexican economy was a dynamics of receipt of direct foreign investments. By the way, the brought table over illustrates considerably more active position of the American capital as compared to Canadian, and also substantial increase of the European investments after signing of Agreement Mexico about free trade from EU in 2000 year.

Foreign trade remains orientated mainly to the markets of the USA. The cost volume of bilateral trade in 2006 year exceeded $340 milliards as compared to $109 milliards in 1993 years. On the stake of the USA in 2006 year was almost 85 % mexican export against 68% at the beginning of 90th of past century. On the whole during all years of integrating collaboration notedly a tendency showed up to the general strengthening of productive, trade and financial dependence of Mexico from the USA.

For years an integrating collaboration in NAFTA, influence of North-American maquiladoras increased on a mexican economy - enterprises, created on the basis of investments of American TNC, mainly frame-clamping character, that operate in the mexican economic system in the conditions of the favourable mode of enterprise liberalized. Before creation of NAFTA of maquiladoras were located mainly on a north to the border line from the USA, and for years existence of NAFTA they spread through this country.

By the way North-American TNC mass create maquiladoras and in other countries of the Ibero-American region. If in 1990 year on mexican territory about 1700 maquiladoras was counted, then in a 2006 amount exceeded them 2800. Maquiladoras play a leading role in the economy of country. On their fate is to the 46% export, thus over 80% in the commodity structure of export of these enterprises the products of hi-tech productions - electrical engineering equipment, electronic apparatus, computers, domestic electronics, knots fold for a car production. In addition on territory of Mexico a stowage and re-export of equipment which is supplied from the USA come true.

In the branch measuring after going into effect about NAFTA of most development tested "mexican" motor industry three-way Agreement. The enterprises of the known world producers of cars took place in Mexico. Membership in NAFTA served an attractive signal for foreign investors. ТNC of the USA became main investors in motor industry in Mexico - over 50%, to Japan - close 30%, Germany - about 10 percents. True, the home investment placing in motor industry , as well as before, notedly yield before foreign. Under act of NAFTA the substantial increase of production and export took place to the USA and Canada of mexican textile and shoe industry. Mexico grew into the main supplier of Text. to the North-American market and almost fully forced out the Asian producers-exporters from him.

The point is that the USA on integrating principles supply with mexican productions American fabrics, textile equipment, designer sketches, render administrative services. Like integrating co-operation takes place in electronic and other industries of mexican economy.

Actually NAFTA provided to the Mexican United States a relative passing ahead increase in comparing to the partners on Agreement. In actual fact this was an increase without development. On macroeconomic indexes Mexico really entered to the group of most economies of the world, and it grounds to the researchers to count her one of ascending countries-giants. However, forecast hopes in relation to a positive decision with the help of NAFTA of sharp and difficult social problems and main from them is an increase of standard of living of people - not come true.

At all positive influences of integrating collaboration in NAFTA Mexico, as well as before, remains the weakest link of the North-American huge organization. Inequality of economies is kept the same deep, as well as at the beginning of 90th of past century. Becomes more obvious, that even in a middling remote prospect Mexico will not be able to overcome an economic and social break which dissociates her from the USA, as, actually, and from Canada.

A project is the North-American free trade zone in an eventual result appeared very capable and effective, though variously, for each of countries-participants.

Table 6.2.2.

NAFTA on the finishing stage

Subjects of integration	Ter. mln. km2	Population Mln. 1993/2008	GDP $ billion. 1993/2008	GDP per capita $ 1993/2008	Export $ billion. 1993/2008	Іmport $billion 1993/2008
USA	9,4	250/304	5.230/14.466	20,920/47580	422,2/1380,5	509,0/2165,9
Canada	9,97	26/33	463/1390	17808/41,730	129,0/456,4	124,0/418,3
МСШ	1,96	86/108	201/1.061	2377/9.980	42.0/291.8	50/323,2
NAFTA	21,33	362/445	5.894/16917	13.702/33097	593,2/2128,7	683/2907,4
World		5 821/6692	29926/57637	5130/8613	5398/16130	5555/16300
%/% to the world		6,2%/6,6%	19,6%/29,4%	267%/384%	10,9%/13,2%	12,3%/17,8%

• World Development Report 2010. Selected world development indicators, р.378-379,386-387

Without regard to any critical remarks, widespread in the USA, and in Mexico, and in Canada, and, actually, and outside a huge organization, in relation to influence of NAFTA on economic and social development of countries-participants of three-way agreement, macroeconomic indexes (table. 6.2.2) by the state on beginning in 2009, id est to the year of completion of action of Agreement, convincingly testify to proof character of positive tendencies in continental integration advancement of North America.