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TABLE OF CONTENTS Preface Introduction Canada Usa's Largest Trading Partner NAFTA Introduction Exporting Guidelines Incentives Customs Contacts Trade Contacts Company Specific Massasoit Machine, Inc. Manufacturers Representative Recommendations Appendices A Country Data B Canadian Domestic Economy C Canadian Trade Statistics D Canada New England Trade Summary, 1997 E NAFTA: A Partnership at Work F (SIC- 3081) Machine Shop Industry G List of Major Industries for SIC- 3081 (Machine Shop) H Internet Access for International Business, Economics, Marketing and Trade Information PREFACE Massasoit Machine, Inc. requested the Rhode Island Export Assistance Center to perform a research study of the Canadian market for its product as a first step in the consideration of an increased effort to expand their market in Canada. If successful this could provide a methodology to address other international markets. This report presents the results of this research study. It includes an overview of Canada and of the market which Massasoit Machine, Inc.

could address. It includes a comprehensive presentation of the North American Free Trade Agreement (NAFTA) which is an agreement between United States, Canada and Mexico that provides almost unlimited access to these markets for American manufacturers. It also provides details of the custom requirements and procedures for exporting to Canada. A number of key contacts, manufacturers, distributors are listed. Also presented are details of the Canadian machine shop industry. INTRODUCTION Canada Usa's Largest Trading Partner The trading relationship between the United States and Canada is, by far, the largest in the world.

Two-way trade in goods and services accounts for approximately US $ 1 billion per day, every day of the year. The U. S. share of total Canadian import is about 71 percent and the United States remains by far Canadas largest export market, taking 76 percent of total Canadian exports. Economic growth in Canada is projected in the 3 percent range in 1997 and 1998 good news for U. S.

exporters! Housing starts, retail trade and automobile sales have been particularly strong sectors in the first quarter of 1997, and domestic demand is expected to be its strongest in years throughout the first half of 1997. In addition, machinery and equipment investment should remain strong as ongoing upgrading of Canadian manufacturing plants and equipment continues. Despite some well-publicized trade disputes, overall market conditions are unlikely to experience any significant changes.

U. S. Companies will continue to find Canada, the largest trading partner, an extremely attractive and easily accessible place to do business. With a population of about one tenth of that of the United States, the Canadian economy mirrors that of the United States in approximately the same ratio, and has developed in many ways along similar lines. This has made Canada an ideal export and investment destination for many U. S.

companies that have found an environment and marketplace very similar to that of the domestic United States. Country specific information about Canada has been annexed as Appendix A. We believe that for the export-ready U. S. firm, Canada First is an appropriate approach. Canada offers an ideal first stop for U.

S. businesses seeking to begin export marketing, with business practices, attitudes, conditions and environments here more similar to those found in the United States than in any other country in the world. Proximity to the United States also reduces a companys time and expense while exploring opportunities in Canada. Notwithstanding these similarities, however, some cultural and linguistic differences, which vary across each of Canadas five distinct regional markets, allow first-time U. S. exporters to develop an appreciation of the complexities of overseas marketing.

Experience gained here can provide a solid basis for success in markets worldwide. Canadian Domestic Economy Appendix B gives a glimpse of the Canadian economy. Best Prospects for U. S. Firms Business opportunity in Canada falls within virtually the full spectrum of industry and agricultural sectors, and in virtually every business activity. More specifically, however, the five top best prospect sectors for U.

S. products include: computers and peripherals; computer software; telecommunications equipment; automotive parts and service equipment; and pollution control equipment. Geographic proximity, cultural and historic ties, and strong awareness of business and other developments in the United States are key accelerators for the sale of U. S. goods and services in the Canadian market. Third-country competition tends to be far less prevalent in Canada than in most other international markets.

NAFTA helps U. S. exporters in the Canadian market relative to their competitors from Europe, Asia and elsewhere. Beginning of January 1, 1998, there has been introduced a duty-free trade between the United States and Canada under NAFTA.

Third-country competition is most often found in product areas where labor constitutes a significant part of the cost of production, and where domestic U. S. industries are less competitive. In other sectors, however, U. S. dominance remains almost a fact of life, and third-country competition is most prevalent in specific cases rather than across the board.

Appendix C on Canadian Trade Statistics is attached as a ready reference. Trade Summary between Canada and New England is presented as Appendix D. Generally, Canadians have strong national pride, and will often favor Canadian products, especially if they offer similar features at a similar cost to those from the United States. This is particularly true for any government procurement, local or federal, not covered under either World Trade Organization (WTO) or North American Free Trade Agreement (NAFTA) rules. Nevertheless, competition in Canada is generally fair and, as noted above, U.

S. firms that can offer technical, cost or feature advantages over locally produced goods can do as well in the Canadian market as they can in the domestic U. S. market. NAFTA (North American Free Trade Agreement) Introduction The North American Free Trade Agreement (NAFTA) between Canada, the United States and Mexico entered into force on January 1, 1994. Designed to foster increased trade and investment among the NAFTA partners, the Agreement contains an ambitious schedule for tariff elimination and reduction of non-tariff barriers, as well as comprehensive provisions on the conduct of business in the free trade area.

These include rules regarding investment, services, intellectual property, competition and the cross-border movement of businesspersons... The NAFTA has improved Canadian access to the U. S. and Mexican markets and enhanced the attractiveness of the Canadian economy to foreign investors. Since the NAFTA? s entry into force, Canadian exports to those markets have shown impressive growth, and foreign direct investment in Canada from all sources has increased steadily.

More importantly, the NAFTA and its predecessor, the Canada- U. S. Free Trade Agreement (FTA), have stimulated significant advances in productivity and specialization within the Canadian economy, and have promoted greater economies of scale, product quality, and cost competitiveness. The result has been improved competitiveness of Canadian exports of both goods and services. Total trade is a key driving force for economical growth and employment creation in an open economy such as Canadas.

The ratio of exports of goods and services to gross domestic product (GDP) in 1996 was 38. 4 percent, making Canadas economy the most globally integrated of all G- 7 countries. After three years of implementation, the NAFTA has further advanced existing trends toward market convergence in North America. This is demonstrated by the figures for 1996, which show $ 388. 3 billion in total Canadian two-way trade with our NAFTA partners, over $ 200 billion in outward and inward foreign direct investment, and over $ 50 billion in trade in services between Canada and the United States. These figures indicate that important markets for a wide range of goods, services, financial resources, and technologies already exist and have prospered in a well-integrated commercial environment. The detailed report NAFTA: A PARTNERSHIP AT WORK by the Department of Foreign Affairs and International Trade (DFAIT) of the Canadian Government is annexed as Appendix E. EXPORTING GUIDELINES Entry and Documentation The Canadian Customs Service (Revenue Canada) requires the following documentation for export: &# 61623; Customs Invoice or its equivalent (for imports valued over C$ 1, 200) &# 61623; Certificate of Origin: Certain controlled imports are subject to import license requirements.

Goods may be cleared at customs ports on the border or, if intended for inland destinations, may be forwarded in bonded carriers to the port or city nearest the destination at which customs examination may be made and duties and taxes paid. In addition, under Canadas Release on Minimum Documentation (RMD) Policy, shipments can be allowed into Canada to be released before goods is classified for duty. When a shipment arrives at a port, an RMD package is presented to Customs to obtain a release. Fully rated documentation, with payment of duties and taxes must then be presented to Customs within five business days following release. This facilitates rapid delivery since product classification and payment of duties and taxes can take places after the goods have been released from Customs. Tariff Classification Tariff classification is based on the Harmonized Commodity Description and Coding System generally referred to as the Harmonized System.

Valuation Canada has acceded to the GATT Customs Valuation Code that provides that the customs value of imported goods shall be the transaction value. The transaction value generally will be accepted by Canadian Customs if the goods are sold for export to Canada and if the price paid or payable for the goods can be determined. Ad valium duties are assessed on the CIF value of the imported merchandise. Temporary Entry Revenue Canada has made specific provision for the temporary entry of certain goods into Canada for various purposes such as testing, demonstration, and display.

Such goods may enter under an ATA (Admission Temporary Admission) Carnet or under a Temporary Admission Permit (Revenue Canada, Customs and Excise Form E 2913) and may require either a refundable deposit or a proportional duty deposit, depending on the appropriate classification determined by Canadian customs regulations. Firms wishing to admit machinery and equipment, display equipment, and other items covered under Canadian temporary importation regulations are advised to contact Revenue Canada well in advance of shipment or arrival in Canada. &# 61623; Free Trade Zones and Warehouses Except for one special trade zone at the Support Industrial Park in Cape Breton, Nova Scotia, Canada has no free ports or free trade zones. At present, there are no federal or provincial laws specifically governing the establishment and operation of such zones. Sufferance warehouses under private ownership have been established for the storage and deposit of all imports received by various transportation modes, pending customs examination and clearance. An entry for consumption or into bonded warehouse must be presented to Customs within 30 days.

Goods may be entered into customs bonded warehouses without the payment of duty but must be cleared either for export or Canadian consumption within two years. Additional periods are provided for certain goods by regulation. Goods exported from bonded warehouses to third countries are subject to Canadian export regulations. Repackaging and sorting can be carried out in customs bonded warehouses with the permission of Canada Customs, but assembly or other industrial activity is prohibited. Special Requirements Labeling, Marking and Packaging Requirements The three main pieces of legislation that regulate almost all product labeling and marking in Canada include: the Consumer Packaging and Labeling Act; the Weights and Measures Act; and the Agricultural Product Standards Act. Canada requires bilingual labeling (English and French) for most products.

Bilingual designation of the generic name on most prepackaged consumer products is required by the federal Consumer Packaging and Labeling Act identified above. Under this act the following information must appear on the label of a consumer good sold in Canada: &# 61623; Product Identity Declaration &# 61623; Net Quantity Declaration &# 61623; Dealers Name and Principal Place of Business Canada Customs also requires an indication of the country of origin, such as Made in the USA, on several classes of imported goods and on all printed matter. Goods not properly marked cannot be released from Customs until suitably marked. The goods can be marked, at the importers expense, either on Canada Customs premises or on the importers own premises under the supervision of Canadian customs officials. The Province of Quebec requires that all products sold in that province be labeled in French and that the use of French be given equal prominence with other languages on any packages or containers sold in Quebec stores. The Charter of the French Language requires the use of French on product labeling, warranty certificates, directions for use, public signs and written advertising.

Technical Standards Under the aegis of the Standards Council of Canada (SCC), several private standards writing organizations administer technical codes and standards for areas ranging from electrical and plumbing products to health care technology. These organizations include: &# 61623; The Canadian General Standards Association &# 61623; Underwriters Laboratories of Canada &# 61623; The Canadian General Standards Board &# 61623; The Canadian Gas Association The Canadian federal government also has numerous commodity standards to safeguard the public welfare. Standards organizations try to avoid duplication of responsibility, but there is some overlap. Under NAFTA, the basic rule is that standards must not create unnecessary barriers to trade.

To reduce such barriers, the NAFTA applies basic principles to bilateral trade: &# 61623; Testing facilities and certification bodies are treated in a nondiscriminatory manner &# 61623; Federal standards-related measures will be harmonized to the greatest extent possible &# 61623; Greater openness will be provided in the regulatory process Restricted or Prohibited Imports Certain commodity such as oleomargarine, reprints of Canadian copyrighted work, and some game birds cannot be imported into Canada. Other goods are controlled, regulated, or prohibited under legislation failing within the jurisdiction of other government departments. Examples of regulated goods include: food products, clothing, drug and medical devices, hazardous products, some offensive weapons and firearms, endangered species, and motor vehicles. Other items are regulated under the Export and Import Permits Act and require an import permit or certificate to be eligible for importation into Canada. The Act lists various agricultural products, a number of clothing and textile items, and certain steel products. Export Controls Canada limits the export of goods in circumstances of surplus supply or depressed prices; restricts the export of softwood lumber products; ensures that there is an adequate supply and distribution of any article; enacts intergovernmental arrangements or commitments; and ensures that military or strategic goods are not exported to countries or destinations representing a strategic threat to Canada.

INCENTIVES Trade Agreements and Preferences Canada, the U. S. , and Mexico are members of the North American Free Trade Agreement (NAFTA) which took effect on January 1, 1994. One of the main provisions of NAFTA is the elimination of tariffs on goods qualifying as North American under the rules of origin. Canada is a member of the World Trade Organization (WTO) and is a founding member of its predecessor, the General Agreement on Tariffs and Trade (GATT). Drawback Canada Customs honored two types of drawback for US exporters. The first, a home consumption drawback, was designed to help manufacturers meet foreign competition by granting them relief from a portion of duties on specific imported goods used in Canada.

The second type of drawback, an export drawback, was designed to help Canadian manufacturers compete in foreign markets, by removing internal Canadian duties and taxes from the cost of Canadian goods exported. Drawback of 100 % duties and sales taxes is granted on imported goods reexported in an unused condition and on imported goods incorporated into Canadian manufactured goods that are subsequently exported. CUSTOMS CONTACTS Department of Foreign Affairs and International Trade Export and Import Controls Bureau 4 C Lester B. Pearson Building, 125; Sussex Drive, Ottawa, ON K I A OG 2 Phone: (613) 992 - 1363) Revenue Canada Ottawa Regional Customs Office 2265 St. Laurent Boulevard Ottawa, ON K I G 4 K 3 Phone: (613) 993 - 0 530 4 NAFTA information Desk Revenue Canada Customs, Excise and Tax 1 st Floor, 555 Mackenzie Avenue Ottawa, ON KI A OL 5 Phone: (613) 941 - 0965; Fax: (613) 941 - 8138 The Director: Policy and Administration Antidumping and Countervailing Division Revenue Canada Customs, Excise and Tax 191 Laurier Avenue, W. Ottawa, ON K I A OL 5 Tel: (613) 954 - 7251; Fax: (613) 941 - 2612 The Secretary, Canadian International Trade Tribunal 365 Laurier Avenue, W.

Ottawa, ON K I A OG 7 Tel: (613) 993 - 4601; Fax: (613) 998 - 4783 Title Secretary, Canadian Section NAFTA Secretariat 90 Sparks Street, Suite 705 Ottawa, ON KIP 5 B 4 Tel: (613) 992 - 9380; Fax: (613) 992 - 9392 Info Export External Affairs and International Trade Canada 125 Sussex Drive Ottawa, ON K I A OG 2 Tel: (613) 944 - 4000 (Ottawa area), 1 - 800 - 267 - 8376 Fax: (613) 996 - 9709 Canada Communications Group Publications Ottawa, ON KIA OS 9 Tel: (819) 956 - 4802; Fax: (819) 994 - 1498 Manager of Origin Audits 6 th Floor, Sir Richard Scott Building 191 Laurier Avenue, W. Ottawa, ON K I A OL 5 Tel: (613) 954 - 5641; Fax: (613) 954 - 4494 Chief, Interdepartmental Programs Commercial Operations Revenue Canada, Customs, Excise and Tax 5 th Floor, 555 Mackenzie Avenue Ottawa, ON K I A OL 5 Tel: (613) 954 - 7129; Fax: (613) 952 - 1698 TRADE CONTACTS ITDN Trade Contacts Canada Country Desks U. S. Department of Commerce Country Desk Canada 15 th St and Constitution Ave, NW Washington, DC 20230 Country/Area Code: 202 Phone: 482 - 0305 US Embassies in Foreign Countries American Embassy Canada 100 Wellington St Ottawa, Ontario, Canada Country/Area Code: 613 Phone: 238 - 5335 Fax: 238 - 5720 Foreign Embassies in the US Embassy of Canada 501 Pennsylvania Ave. NW Washington, DC 20001 Country/Area Code: 202 Phone: 682 - 1740 Fax: 682 - 7726 Consulates Commercial Section Consulate General Suite 1050, 615 Macleod Trail S. E.

Calgary, Alberta Canad Country/Area Code- 403 Phone- 266 - 8962 Fax: 264 - 6630 Consulates Commercial Section Consulate General Cogswell Tower, Suite 910 Scotia Square, Halifax Nova Scotia, Canad Country/Area Code: 902 Phone: 429 - 2480 Fax: 423 - 6861 Consulates Commercial Section Consulate General P. O. Box 65 Postal Station Desjardins Montreal, Canad Country/Area Code: 514 Phone: 398 - 9695 Fax: 398 - 0973 Consulates Commercial Section Consulate General 2 Place Terrace Dufferin C. P. 939 Quebec, Canada Country/Area Code: 418 Phone: 692 - 2095 Fax: 692 - 4640 Consulates Commercial Section Consulate General 360 University Ave. Toronto, Canad Country/Area Code: 416 Phone: 595 - 1700 Fax: 595 - 0051 Consulates Commercial Section Consulate General 1095 West Pender St. British Columbia, Canad Country/Area Code: 604 Phone: 685 - 4311 Fax: 685 - 5285 Foreign Banks in the US Bank of Nova Scotia R.

E. Waugh, SVP 165 Broadway New York, NY 10006 Country/Area Code: 212 Phone: 225 - 5000 Fax: 225 - 5090 Foreign Banks in the US Canadian Imperial Bank of Commerce Chris Rowland, VP 425 Lexington Ave. 5 th Fl. New York, NY 100 17 Country/Area Code: 212 Phone: 856 - 4000 Fax: 856 - 6699 Foreign Banks in the US National Bank of Canada Roger P. Smock, SVP 125 W. 55 th St.

New York, NY 100 19 Country/Area Code: 212 Phone: 632 - 8500 Fax: 632 - 8616 Foreign Banks in the US Royal Bank of Canada Kenneth Bender, Mgr. Financial Sq. 23 rd Fl. New York, NY 10005 Country/Area Code: 212 Phone: 428 - 6200 Fax: 269 - 4378 Foreign Banks in the US Toronto-Dominion Bank Michael Mueller, SVP 31 W. 52 nd St. New York, NY 100 19 Country/Area Code: 212 Phone: 468 - 0300 Fax: 262 - 1923 Foreign Banks in the US Harris Bank Intl Corp. 430 Park Ave. New York, NY 10022 - 3505 Gerry Daly, VP; Barry Cather wood, AVP Country/Area Code: 212 Phone: 715 - 2674 Fax: 758 - 9847 World Trade Centers World Trade Center Edmonton Suite # 502, Metropolitan Place 10303 Jasper Avenue Edmonton Alberta, Canad Country/Area Code: 403 Phone: 420 - 1155 Fax: 424 - 3091 Email: WTCED World Trade Centers Atlantic-Canada World Trade Center Halifax 1800 Argyle Street, Suite 511 Halifax, Nova Scotia, Canad Country/Area Code: 902 Phone: 428 - 7233 Fax: 420 - 8308 Email: WTCHA World Trade Centers World Trade Center Montreal (R) 380 St. Antoine St. , West Suite 2100 Montreal, Quebec, Canad Phone: 849 - 1999 Fax: 847 - 8343 World Trade Centers World Trade Center Ottawa 130 Slater Avenue, Suite 750 Ottawa, Ontario KIP 6 E 2 Canada Country/Area Code: 613 Phone: 598 - 4666 Fax: 594 - 8705 World Trade Centers World Trade Center Quebec-Canada 10 Rue del?

Hotel-de-Ville P. O. Box 5187 Beauport, Quebec Country/Area Code: 418 Phone: 666 - 6136 Fax: 667 - 8936 Email: WTCQB World Trade Centers World Trade Center Toronto The Board of Trade of Metro Toronto P. O. Box 375 One First Canadian Place Toronto, Ontario, Canad Country/Area Code: 416 Phone: 366 - 6811 Fax: 366 - 2444 Email: WTCTR World Trade Centers World Trade Center Vancouver 999 Canada Place, Suite 400 Vancouver, B.

C. Canad Country/Area Code: 604 Phone: 681 - 2111 Fax: 681 0437 Email: WTCVN World Trade Centers World Trade Center Damascus Canadian Develop. &# 038; Market. Corp. Suite 4900, Scotia Plaza 40 King Street West Toronto, Ontario M 511 4 A 2 Canada Country/Area Code: 416 Phone: 777 - 6701 Fax: 777 - 6707 Ocean Carriers Bolt Canada Line Morlines Maritime Agency Ltd. 485 McGill, Fifth Fl. Montreal, PQ H 2 Y 2 H 4 Canada Country/Area Code: 514 Phone: 285 - 1571 Fax: 285 - 1707 Ocean Carriers C.

S. A. V. (Chilean Line) Robert Record 221 St. Sacrament Montreal, PQ H 2 Y 1 X 2 Canada Country/Area Code: 514 Phone: 845 - 5201 Fax: 845 - 6490 Railroads, US Ontario Northland Transportation Commission 555 Oak St. E. North Bay, ON P 1 B 8 L 3 Canada Country/Area Code: 705 Phone: 472 - 4500 Fax: 472 - 4267 Railroads, US Quebec North Shore &# 038; Labrador Ray 100 Reply St.

Sept-Iles, PQ G 4 R 3 EI Canada Country/Area Code: 418 Phone: 968 - 7804 Fax: 968 - 7183 Railroads, US CN Rail 935 de la Gauchetiere W. P. O. Box 8100 Montreal, PQ 113 C 3 N 4 Canada Country/Area Code: 514 Phone: 399 - 4783 Fax: 399 - 8459 Railroads, US CP Rail System 1290 Central Pkwy. W. Sixth Fl.

Mississauga, ON L 5 C 4 R 3, Canada Country/Area Code: 905 Phone: 803 - 3210 Fax: 803 - 3300 Last Update: 08 / 05 / 98 Time: 20: 21: 59 Copyright 01998 by International Trade Data Network ALL RIGHTS RESERVED COMPANY SPECIFIC Introduction Massasoit Machine, Inc. specializes in automatic screw machining (single spindle) and CNC precision machining of metal and plastic components for a wide variety of industrial, commercial and military customers located throughout eastern U. S. The Standard Industrial Classification (SIC) code for Massasoit Machine is SIC- 3451 (Screw Machine Products). A detailed report on trade trends over the period from 1992 to 1996 for the Machine Shop Industry of the US and Canada is attached as Appendix F. This report has been prepared by the Canadian Industry Statistics Development Team.

SIC- 3081 is the Canadian classification of this industry Appendix G contains a partial list of (SIC- 3 08 1) Major Players in Machine Shop Industry establishments in Canada. These industrial establishments could be potential customers / competitors for Massasoit Machine Inc. MARKET CHANNEL Use of Agents and Distributors: Distribution channels in Canada vary greatly according to the products and commodities involved. For example, industrial equipment of considerable size and value is usually purchased directly by end-users. Smaller equipment and industrial supplies, on the other hand, are frequently imported by wholesalers, acting in some cases as exclusive distributors, or by U. S.

manufacturers sales subsidiaries. U. S. firms have historically preferred to appoint manufacturers agents who regularly call on potential customers. Many major distributors expect to work on a two-tier commission basis.

For contract shipments, agents are offered a low (but realistic) commission, but they receive a higher rate when purchases are made from a local agents own stocks. Consumer goods are purchased by importing wholesalers, department stores, mail-order houses, chain stores, wholesalers and retailers purchasing cooperatives, and many large, single-line retailers. Manufacturers agents also play an important role in the importation and distribution of consumer goods. In addition, the importance of department stores, mail-order houses and cooperative purchasing organizations as direct importers has increased substantially. Many of these groups have their own purchasing agents in the United States. MANUFACTURERS REPRESENTATIVE Listed below are a few of the manufacturers representatives which could be a potential contact in Canada for the high precision one machining industry of US such as Massasoit Inc.

This channel of exporting could be one of the most effective ways of market entry into Canada by a US manufacturing organization. These manufacturers representatives are from the MANA (Manufacturers Agents National Association) -Canada Directory. J. &# 038; Fraser &# 038; Associates Ltd. John R. Fraser 3010 Longfellow Ave Windsor, ON N 9 E 2 L 5 Canada Phone: (519) 969 - 1842 Fax: (519) 969 - 1625 Products Sold: Springs, wire-formed parts / assemblies , small stampings from coil-four slide parts, screw machine parts. Territory: Canada: S.

ON; Montreal area, QU. Nuclear Fittings, Ltd. Jack C. Wiggelaar 151 Bentley St. , Unit 4 Markham, ON L 3 R 3 X 9 Canada Phone: (905) 475 - 1785 Fax: (905) 475 - 2358 Products Sold: Cold headed products: screws, bolts, nuts, conduit products, springs, stampings, weld nuts &# 038; weld studs, powdered metal products, washers, clevis pins, rivets, clik, lynch, bridge, weld, groove, hitch pins, elastomeric parts, screw machine products.

Territory: ON, QU, AB, NS, MT OEM SALES Direct Shen stone 55 -C Beverly Hills Dr. Toronto, ON M 3 L I A 2 Canada Phone: (416) 614 - 8844 Fax: (416) 614 - 8292 Products Sold: Castings, forgings, screw machine components, plastic / rubber parts, gas cylinders, linear actuators, OEM components, ultra precision / sub -miniature machining, miniature control cables. Territory: ON, QU, Eastern Canada. The decision to enter the Canadian market can only be made by the owners of Massasoit Machine, Inc. It is hoped that the contents of this research study will assist in the making of an objective and rationale decision.

If a positive decision is made to enter the Canadian market, the report suggests the use of manufacturers representatives as one of the most effective way of the market entry. It lists several potential contacts. Additionally the report list a number of manufacturers in the machine shop industry. This list includes both potential customers and possible competitors. Massasoit Machine, Inc.

may decide to contact the potential customers directly before appointing their own representative. Success in the Canadian market will not appear immediately. Further it is important to learn from the mistakes of others in addressing export markets. The U. S, Department of Commerce has listed a number of the most common mistakes made by the new exporters. These include: &# 61623; Lack of an export marketing plan. &# 61623; Insufficient long term commitment by top management. &# 61623; Failures to allocate adequate company resources in terms of finance and personnel.

Appendix A COUNTRYDATA Population: 28, 846, 761 (January 1, 1997, based on actual census count in 1996) Population Growth Rate: 1. 3 % (estimate) Primary Religions: Catholic 42 %; Protestant 40 % (estimate) Government System: Confederation with Parliamentary Democracy Prime Minister: Mr. Jean Chretien (Liberal Party) Official Languages: English and French Work Week: Monday to Friday, 9: 00 a. m. to 5: 00 p. m. Source: Statistics Canada Appendix B (This appendix was prepared by the Economic Section of the U.

S. Embassy in Ottawa using Department of State resources. ) CANADIAN DOMESTIC ECONOMY (In billions of Canadian dollars, unless otherwise indicated) (Please note: Forex fluctuations cause distortions in actual levels and growth rates when converting C$ data into US$. ) ECONOMIC INDICATOR 1996 1997 1998 Real GDP 617. 8 635. 2 651. 5 (Based on 1986 C$) GDP Growth Rate (%Real GDP Per Capita 20, 593 20, 827 21, 015 (C$ 000 s) Public Sector Device (as a percentage of GDP) Inflation (%UnemploymenForeign Exchange Reserves 20. 6 N. A. N. A. (Reported in Billions of US$) Average Exchange Rate 73. 34 73. 60 68. 00 (C$ 1 = US cents) Net Public Debt 598. 0 615. 0 624. 0 Federal Debt Service Charges 29. 4 30. 3 31. 0 (% of Total Spending) Source: U. S.

Embassy Economic Section and Statistics Canada Appendix C (This appendix was prepared by the Economic Section of the U. S. Embassy in Ottawa using Department of State resources. ) CANADIAN TRADE STATISTICS (Balance of Payments Basis) (In billions of Canadian dollars unless otherwise indicated, because foreign exchange conversion distorts actual trends and growth rates. ) 1996 1997 1998 Exchange Rate 73. 34 73. 60 68. 00 (C$ 1 = US cents) Total Canadian Exports 329. 6 351. 7 377. 7 (merchandise and non-merchandise). Total Canadian Imports 331. 2 354. 1 377. 5 (merchandise and non-merchandise) Canadian Exports to the U.

S. 249. 6 267. 3 287. 1 (merchandise and non-merchandise) U. S. Imports into Canada 232. 5 251. 4 268. 0 (merchandise and non-merchandise) U. S. Share of Total Canadian Imports 71. 0 71. 0 71. 0 (merchandise and non-merchandise) Total Trade With the World 60. 8 705. 8 671. 7 (merchandise and non-merchandise) Total Trade With the U. S. 482. 1 514. 4 550. 4 (merchandise and non-merchandise) U.

S. Share of Manufactured Imports (%) 72 74 74 Canadian Merchandise Trade Balance With Three Leading Trade Partners in 1996 (Balance of Payments Basis) United States: + C$ 40. 7 Billion Japan: + C$ 3. 4 Billion United Kingdom: C$ 1. 4 Billion Principal Canadian Exports to the United States in 1996 (Billions of Canadian Dollars) Motor vehicles and parts 61. 5 Machinery and Equipment 42. 7 Industrial Goods 35. 7 Forestry Products 25. 2 Energy Products 24. 8 Principal Canadian Imports from U. S. in 1996 (Billions of Canadian Dollars) Machinery and Equipment 50. 3 Automotive Products 43. 1 Industrial Goods 33. 1 Consumer Goods 14. 5 Agriculture/Fishing Products 8. 1 Source: Statistics Canada Appendix D Canada New England Trade Summary, 1997 Newfoundland Prince Edward Island Nova Scotia New Brunswick Quebec Ontario Manitoba Saskatchewan Alberta British Columbia Yukon Territories NW Territories Appendix E NAFTA: A PARTNERSHIEP AT WORK (Department of Foreign Affairs and International Trade (DFAIT): June 1997 TABLE OF CONTENTS Introduction NAFTA: A Partnership at Work The NAFTA Commission NAFTA Coordinating Secretariat Working Groups and Committees The Dispute Settlement Process Accession to the NAFTA Trade Results Trade In Services Trade Liberalization through Tariff Reduction Commitments Investment The North American Agreements on Environmental and Labour Co-operation Labour Environment Introduction The North American Free Trade Agreement (NAFTA) between Canada, the United States and Mexico entered into force on January 1, 1994. Designed to foster increased trade and investment among the NAFTA partners, the Agreement contains an ambitious schedule for tariff elimination and reduction of non-tariff barriers, as well as comprehensive provisions on the conduct of business in the free trade area. These include rules regarding investment, services, intellectual property, competition and the cross-border movement of businesspersons.

The NAFTA has improved Canadian access to the U. S. and Mexican markets and enhanced the attractiveness of the Canadian economy to foreign investors. Since the Nafta's entry into force, Canadian exports to those markets have shown impressive growth, and foreign direct investment in Canada from all sources has increased steadily. More importantly, the NAFTA and its predecessor, the Canada-U.

S. Free Trade Agreement (FTA), have stimulated significant advance; in productivity and specialization within the Canadian economy, and have promoted grater economies of scale, product quality, and cost competitiveness. The result has been improved competitiveness of Canadian exports of both goods and services. Total trade is a key driving force for economic growth and employment creation in an open economy such as Canadas. The ratio of exports of goods and services to gross domestic product (GDP) in 1996 was 38. 4 percent, making Canadas economy the most globally integrated of all G- 7 countries.

After three years of implementation, the NAFTA has further advanced existing trends toward market convergence in North America. This is demonstrated by the figures for 1996, which show $ 388. 3 billion in total Canadian two-way trade with our NAFTA partners, over $ 200 billion in outward and inward foreign direct investment, and over $ 50 billion in trade in services between Canada and the United States. These figures indicate that important markets for a wide range of goods, services, financial resources, and technologies already exist and have prospered in a well-integrated commercial environment. The NAFTA Commission The Free Trade Commission, which includes cabinet-level representatives from the three member countries, is the central institution of the NAFTA. The Commission supervises the implementation and further elaboration of the Agreement and helps to resolve disputes arising from its interpretation. It also oversees the work of the Nafta's 30 -plus committees and working groups.

The Commission last met in Washington, D. C. in March 1997. Ministers have agreed that the Commissions next meeting will take place in Mexico early in 1998.

NAFTA Coordinating Secretariat Ministers have agreed that the Commission will be assisted in its work by the NAFTA Coordinating Secretariat (NCS), which is to be established later this year in Mexico City. The NCS will serve as the formal archive for the work of the NAFTA and serve as a working secretariat to the Commission. Working Groups and Committees The NAFTA envisages further work to help fully achieve the objective of a free trade area. Under the Agreement, over 30 working groups and committees were established to facilitate trade and investment and to ensure effective implementation and administration of the Nafta's rules. Key areas where this work is being undertaken include rules of origin, customs, agricultural trade and subsidies, standards, government procurement and the cross-border movement of business people.

These working groups and committees report annually to the NAFTA Commission, composed of the trade ministers of Canada, Mexico and the United States. The NAFTA working groups and committees also help to smooth the implementation of the Agreement and provide a forum for exploring ways of further liberalizing trade between members. One example is Canadas continued effort to pursue the accelerated reduction of tariffs on specific goods. The NAFTA working groups and committees also provide an apolitical arena for the discussion of issues and, through early dialogue on contentious points, the possible avoidance of dispute settlement procedures. The Dispute Settlement Process The vast majority of trade in North America now takes place in accordance with the clear and well-established rules of the NAFTA and the World Trade Organization (WTO).

Nonetheless, in such a large trading area disputes are bound to emerge. In such cases, the NAFTA directs the governments concerned to seek to resolve their differences amicably, through the Nafta's committees and working groups or other consultations. If no mutually acceptable solution is found, the NAFTA provides for an expeditious and effective panel procedure. The administration of the dispute settlement provisions of the NAFTA is the responsibility of the Canadian, U. S. and Mexican National Sections of the NAFTA Secretariat.

In the first nine months of the 1996 - 97 fiscal year, the Secretariat administered 14 panel reviews under Chapter Nineteen of the Agreement and one arbitral panel proceeding under Chapter Twenty. Eight Chapter Nineteen panel decisions and one Chapter Twenty panel report were issued in 1996. Chapter Twenty of the NAFTA sets out the institutional arrangements and dispute settlement procedures. As of the end of 1996, 11 consultations had been requested under Chapter Twenty on 10 measures. One of these proceeded to an arbitral panel. Chapter Fourteen adds special procedures for any disputes that may arise over financial services.

Building on the Canada-U. S. FTA, the NAFTA also includes, in Chapter Nineteen, a unique system of binational panel review of domestic decisions regarding anti-dumping and countervailing duty issues, which replaces judicial review in each of the three countries. There have been 73 requests for panel review under Chapter Nineteen since the adoption of the FTA. Despite the clear success of Chapter Nineteen under the FTA and the NAFTA, Canada continues to believe that the application of trade remedies has no place in a free-trade area. Accordingly, Canada will continue to pursue the significant reform, if not elimination, of trade remedies within North America.

For investment matters, the NAFTA sets out procedures for Mixed arbitration between the aggrieved investor and the host government concerned, using procedures common to Canadian foreign investment protection agreements and the World Banks Center for the Settlement of Investment Disputes. The NAFTA also requires domestic agencies to respect the principles of due process, fairness and transparency. For example, it requires each country to institute or maintain a system for bid challenge review of government procurement decisions. As of January 1, 1997, the Canadian Section of the NAFTA Secretariat is also responsible for the administration of the dispute resolution process under Chapter 8 of the Canada Israel Free Trade Agreement. Effective in July 1997, the Canadian Section will assume responsibility for the administration of the dispute resolution process under Chapter N of the Canada-Chile Free Trade Agreement. Accession to the NAFTA The NAFTA was designed as an outward-looking agreement with the potential to be expanded to include new members.

Canada believes that membership should remain open to countries willing and able to undertake the NAFTA? s obligations, including the parallel agreements on labor and the environment. Negotiations to achieve Chiles accession to the NAFTA were officially launched in June 1995. Canada has been an active proponent of Chiles accession to the NAFTA.

Stronger economic ties with Chile will create more opportunities for trade and investment in this high-growth market. In view of the present lack of fast-track authority for trade negotiations in the United States, Canada and Chile successfully completed negotiations on a interim bilateral free-trade agreement and parallel agreements on environmental and labor co-operation, which will serve as a bridge to Chiles eventual accession to the NAFTA. Mexico and Chile currently are negotiating revisions to strengthen a bilateral trade agreement between them. Trade Results In the wake of the implementation of the Agreement on January 1, 1994, total trade between NAFTA member countries began expanding at unprecedented rates. The average annual increase in total trade for the three years ending on December 31, 1996 was 13. 8 percent. In 1996 Canadas total trade with NAFTA partners increased by 5. 8 percent to reach $ 388 billion.

Strong export performance contributed to a merchandise trade surplus with those partners to an all-time high of $ 41. 2 billion and is an important contributing factor in reducing current-account deficits that have prevailed for more than a decade. Merchandise export surpluses have very nearly offset Canadas deficit in services and non-merchandise transactions with its NAFTA partners. In particular, the increase in Canadian exports since the implementation of the NAFTA has led to a steady narrowing of the overall current-account deficit. Exports have been especially strong in automotive equipment (trucks, cars and parts), machinery and industrial goods, aluminum, iron ore and fertilizers. Reflecting this trend, the share of exports to NAFTA partners in Canadas total exports has increased from 80. 8 percent in 1993 to 81. 5 percent in 1996. Graph Here Imports to Canada from NAFTA members also increased particularly for machinery and equipment, communications equipment, automotive equipment, and agricultural products.

The share of imports from NAFTA partners in Canada? s total imports has also increased from 69. 2 percent in 1993 to 70. 2 percent in 1996. Following already impressive growth since the FTA came into effect on January 1, 1989, Canadian exports to the United States increased by 22 percent in 1994, followed by a further increase of 14 percent in 1995 and 6 percent in 1996 to reach $ 223. 5 billion. Two-way trade also expanded at similar rates to reach $ 3 8 1. 0 billion in 1996. Canada and the United States currently exchange over $ 1 billion in goods and services each day. The graphs below demonstrate that trade in machinery and transportation equipment continues to be at the core of trade between Canada and the United States.

Since the FTA was implemented, Canadian exports to the United States for manufactured and industrial goods, with their higher value-added component, have steadily increased. Similarly, Canada continues to be the main destination of exports from the United States, the value of which rose by 82. 9 percent $ 71 billion -between 1988 and 1996. One important benefit of the NAFTA for Canada is better access to the Mexican market. Canadian firms have been able to expand sales in sectors that were previously highly restricted, such as automotive products, financial services, trucking, energy and fisheries.

Also, Canadian exports have become steadily more diversified, with value-added manufactured products accounting for more than 50 percent of total exports to Mexico in 1996. As a result, Mexico is now Canadas ninth largest export market and fourth largest import source. Despite the economic adjustments required in Mexico as a result of the financial crisis of December 1994 and its aftermath, Canadian exports to Mexico increased by 5. 4 percent to $ 1. 1 billion in 1995, bringing two-way trade to nearly $ 6. 5 billion. Exports to Mexico rose by a further 5. 3 percent in 1996, with two-way trade climbing by 10. 4 percent to over $ 7. 2 billion. By 1996 the two-way trade between Canada and Mexico represented a doubling of the trade levels registered in 1992. Ongoing market liberalization efforts in Mexico, particularly in the energy, banking, telecommunications and transportation sectors, continue to create opportunities for Canadian exporters.

As the Mexican economy evolves and strengthens, the demand for goods and services will continue to increase. Canada is well placed to respond to those needs. Trade In Services The value of the two-way trade in services (such as travel, freight and shipping and commercial fees) between Canada and the United States has increased by 71 percent since 1988, growing in value from $ 30. 4 to $ 52. 0 billion in 1996. The NAFTA expanded the extent of coverage under the Canada-U. S. FTA to include virtually all aspects of cross border trade in services.

Over the three-year period ending on December 3 1, 1996, Canadian service exports to the United States rose by 16. 9 percent, while imports from the United States increased by 11. 3 percent. In 1996, exports of Canadian services to the United States and Mexico showed small increases, moderating Canadas traditional deficit in this sector to some extent. The fastest-growing component of the services trade has been in the computer and information services area, where there is a high degree of specialization. In fact, bilateral trade between Canada and the United States in informatics services has emerged as one of the fastest-growing in the world. Exports to the United States have also increased in such areas as communications, architecture, engineering and other technical services. Imports of management and advertising services to Canada from the United States have increased for management and advertising services.

Canadian Trade in Services with the United States GRAPH Although the trade in services is on the rise, it corresponds to only 14 percent of total merchandise trade. Given the large contribution of services to Canadas GDP (almost two thirds) and the rapid growth of the services sector in both economies, this trade is expected to increase in the future. Trade Liberalization Through Tariff Reduction Commitments The NAFTA does not affect the tariff phase-out of the Canada-U. S. Free Trade Agreement (FTA), under which virtually all tariffs between the United States and Canada, will be eliminated by January 1, 1998. For trade between Canada and Mexico, the NAFTA will result in the elimination of virtually all tariffs by January 1, 2003.

In addition, the NAFTA provides for the accelerated elimination of tariffs where countries agree. This is an industry-driven process that includes public consultations, involving consumers and other interested parties, whereby the elimination of tariffs is negotiated based on support in the industry sector concerned. Preliminary figures and studies indicate the extent to which tariff reduction under the FTA and NAFTA have had effects on growth rates of trade. Canadian exports to the United States have grown faster (in both value and volume terms) in some sectors liberalized by the FTA and NAFTA (e. g.

industrial machinery, office machinery, textile materials, specialty papers, and consumer goods) than in sectors where tariffs were already low or at zero. Imports from the United States show similar trends (particularly in areas such as clothing, processed food and beverages, furniture, transportation equipment, and household products). In value terms, between 1988 and 1995, Canadian exports to the United States of products liberalized by the FTA and NAFTA increased by about 140 percent, whereas the increase for exports as a whole was 100 percent. Imports of liberalized products from the United States increased by about 100 percent, while total imports increased by 75 percent. Investment The NAFTA has contributed to enhancing Canadas attractiveness to foreign investors while providing more opportunities for Canadians to invest in NAFTA partners economies.

The Agreements provisions ensure greater certainty and stability for investment decisions by guaranteeing fair, transparent and non-discriminatory treatment of investors and their investments throughout the free trade area. The Nafta's contribution to increased productivity through more competition and better-priced inputs has also prompted greater capital investment in Canada. Total foreign direct investment (FDI) in Canada increased by 8. 7 percent in 1994, 9. 3 percent in 1995, and 7. 4 percent for a total of $ 180 billion in 1996. There have been notable investment gains in financial services, transportation equipment, automobile equipment, chemicals, energy, communications, and food and beverages. Statistics Canada reports that, in 1996, Canada was the worlds third-largest recipient of direct investment by foreign multinational companies, which accounted for $ 12. 0 billion of direct investment from a wide variety of sources. Foreign investors financed a significant portion of their investment through reinvested Canadian profits, benefiting all Canadians.

At the end of 1996, 87 percent of FDI was in Canadian subsidiaries. The United States remains the largest foreign investor in Canada. The stock of direct investment from the United States increased for the fourth straight year, by 9. 1 percent in 1996 to $ 122. 7 billion, representing 68 percent of total foreign direct investment in Canada. The United States also remained the largest destination for Canadian direct investment with a total of $ 92. 9 billion invested abroad, an increase of 7. 5 percent in 1996. This represents 54 percent of all Canadian outward investment, an historically low, but relatively stable figure in the last four years. The signing of the NAFTA has meant more dramatic increases in capital flows between Canada and Mexico.

Total Canadian investment in Mexico more than doubled between 1993 and 1994 to $ 1. 07 billion, decreasing slightly to $ 919 million in 1995, before increasing rapidly in 1996 to $ 1. 3 billion. This made Canada one of the most important sources of new investment in Mexico in 1996. Current Canadian investment in Mexico is concentrated in mining, banking and telecommunications. Further potential exists in sectors such as gas and energy. Mexican investment in Canada is growing, but remains very small. The increased FDI into Canada since the early 1990 s has also had an important effect on the renewal of plants and equipment.

FDI in machinery and transport equipment increased by 50. 1 percent between 1990 and 1996 alone. This investment is also assumed to have contributed to the higher productivity observed during this period. Canadian Investment in the United States Mexican Investment in Canada Canadian Investment in Mexico The North American Agreements On Environmental And Labour Co-Operation Negotiated and implemented in parallel to the NAFTA, the North American Agreements on Environmental and Labour Co-operation were designed to facilitate greater cooperation between the partner countries in those areas and to promote the effective enforcement of each countrys laws and regulations. Labour The Commission for Labour Co-operation (CEC) was created in 1994 by the North American Agreement on Labour Co-operation (NAALC) to promote co-operation on Labour matters between NAFTA members and to promote the effective enforcement of domestic Labour law. The Commission consists of a Council of Ministers (comprising the labour ministers from each country) and a Secretariat, located in Dallas, Texas. The Secretariat provides administrative, technical and operational support to the Council and is charged with the implementation of an annual work program.

National Administrative Offices (NAOs), located in the departments responsible for labour in each of the three countries, serve as domestic implementation points for the Agreement. Regarding the NAALC, the Canadian Intergovernmental Agreement provides a mechanism for provincial participation and has now been signed by Alberta, Quebec and Manitoba. This agreement gives the provinces an important role in developing and managing Canadas involvement in the NAALC. With the combined participation of these provinces and the federal government, the NAALC now covers more than 40 percent of the Canadian workforce. As of June 1997, a total of seven public communications have been received under the NAALC, all of which deal with freedom of association. Six of the submissions have been directed at Mexico (one was withdrawn) and one at the United States.

Canada has not been the subject of any submissions. In 1996, the Commission issued a preliminary report profiling North American labour markets. It also released an initial report on labour law in Canada, Mexico and the United States in the area of industrial relations (freedom of association and right to organize, right to bargain collectively and right to strike). At the request of the Council, the Secretariat completed a study on the effects of sudden plant closures on freedom of association and the right to organize. In February 1997, the Secretariat hosted the first North American Seminar on Incomes and Productivity with business, labour and academic participation. Environment The Commission for Environmental Co-operation (CEC) was created in 1994 by the North American Agreement on Environmental Co-operation (NAAEC) to enhance regional environmental co-operation, reduce potential trade and environmental conflicts and promote the effective enforcement of environmental law.

It also facilitates co-operation and public participation to foster conservation, protection and enhancement of the North American environment. The Agreement, signed by Canada, Mexico and the United States, complements the environmental provisions established in the NAFTA. The CEC consists of three principal components: the Council, the Joint Public Advisory Committee (JPAC) and the Secretariat. The Council, which is the governing body of the CEC and is composed of cabinet-level representatives from each of the three countries, met in Pittsburgh, Pennsylvania in June 1997.

The Joint Public Advisory Committee is composed of 15 members, five from each of the three countries; it advises the Council on any matter within the scope of the Agreement. The Secretariat provides administrative, technical and operational support to the Council and is charged with the implementation of the annual work program. Regarding the NAAEC, the Canadian Intergovernmental Agreement (IGA) provides a mechanism for provincial participation in the Agreement and has now been signed by Alberta, Quebec and Manitoba. The IGA facilitates the provinces participatory role in developing and managing Canadas involvement in the NAAEC. The Council is responsible for approving the Commissions work program and the Secretariat receives endorsement to implement it. Progress has been made in several areas.

On Sound Management of Chemicals, tri national-working groups are working toward developing regional action plans for polychlorinated biphenyls (PCBs), mercury chlordane and dichloro-diphenyl-trichloroethane (DDT). Two other substances are likely to be identified for implementation in the course of 1997. On Climate Change, four joint implementation proposals two related to carbon sequestration and two related to energy have been chosen by the CEC for pre-feasibility studies. It is also the Secretariats role to consider complaints from any non-governmental organization or person asserting a partys failure to enforce its environmental law. As of June 1997 the Secretariat has received three such complaints. The Secretariat also prepares reports on any environmental matter related to the co-operative functions of the NAAEC. &# 61623; Department of Foreign Affairs and International Trade, September 1998 Appendix F (SIC- 3081) Machine Shop Industry The 4 -digit SIC under review is the Machine Shop Industry, which is associated with the Machine Shop Industry 3 -digit SIC, which in turn is one of the major industry categories under the broader 2 -digit Fabricated Metal Products Ind. (excl.

Machinery and Transportation Equipment). With respect to the activity or division grouping, this latter industry grouping falls under the Manufacturing division. Statistics Canada defines the Machine Shop Industry (SIC 3081) as: Establishments primarily engaged in manufacturing machine parts and equipment, other than complete machines, for the trade. This industry includes machine shops providing custom and repair services. Establishments primarily engaged in rebuilding or remanufacturing automotive engines are included here.

Establishments primarily engaged in repairing automotive generators, starter motors and alternators are classified in 9941 Electric Motor Repair those primarily engaged in rebuilding automotive parts such as fuel pumps, water pumps, brake shoes, clutches, solenoids and voltage regulators are classified in 5529 Other Motor Vehicle Parts and Accessories, Wholesale and those primarily engaged in repairing automobiles and trucks are classified in 63 5 Motor Vehicle Repair Shops and 5512 Trucks and Buses, Wholesale , respectively. Some, but not a of the products related to this industry include: Camshaft regrinding


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