The North American Free Trade Agreement (NAFTA) is a regional agreement between Canada, Mexico, and the United States to implement a free trade area—the world’s largest, according to the Office of the U.S. Trade Representative. It was officially signed in 1992 and entered into force on January 1, 1994, with the final provisions fully implemented on January 1, 2008.With full implementation, the last remaining trade restrictions on agricultural commodities, such as U.S. corn exports to Mexico and Mexican exports to the United States of sugar and certain horticultural products, were removed.
A North American free trade agreement had been advocated for a number of years prior to NAFTA. U.S. president Ronald Reagan proposed a North American common market in 1981, and in 1985 Canadian prime minister Brian Mulroney announced that Canada would try to reach a free trade agreement (FTA) with the United States. Negotiations started in 1986, and a Canada-U.S. FTA was signed in 1988 that took effect the following year. In 1990, the United States and Mexico announced that they would begin discussions aimed at liberalizing trade between them, and in February 1991, U.S. and Mexican negotiations aimed at liberalizing trade officially became trilateral at Canada’s request.
Trade negotiations among the three countries started in June 1991. NAFTA was officially signed in December 1992 by Mulroney, U.S. president George Bush, and Mexican president Carlos Salinas de Gortari, subject to its final approval by the legislative bodies of the three countries. Key provisions cover market access for goods, protection for foreign investment, protection for intellectual property, easier access for business travelers, access to government procurement, and rules of origin. The NAFTA partners also negotiated two side agreements: the North American Agreement on Environmental Cooperation and the North American Agreement on Labor Cooperation.
Various institutions work to implement and provide daily oversight of the agreement’s provisions. The Free Trade Commission (FTC) supervises the implementation and further elaboration of NAFTA and helps resolve disputes arising from its interpretation. Canada hosted the FTC’s twelfth meeting in 2007. In their joint statement, the ministers agreed to examine new and creative ways of further promoting regional trade and business opportunities. The FTC also oversees the work of the NAFTA committees, working groups, and other subsidiary bodies. NAFTA coordinators are responsible for the day-today management of NAFTA implementation. Over 30 working groups and committees have been established to facilitate trade and investment and to ensure the agreement’s effective implementation and administration. The NAFTA Secretariat is an independent agency responsible for the impartial administration of dispute settlement provisions.
According to the U.S. Department of Agriculture, “NAFTA is one of the most successful trade agreements in history and has contributed to significant increases in agricultural trade and investment between the United States, Canada and Mexico and has benefited farmers, ranchers and consumers throughout North America.” The World Bank has also stated that NAFTA has helped Mexico’s development (though not enough to achieve economic convergence with Canada and the United States). However, there has been criticism of the agreement, including allegations that NAFTA has resulted in job losses, has harmed workers by eroding labor standards and lowering wages, has undermined national sovereignty and independence, has not helped the environment, and has hurt manufacturers and the agricultural sector. These allegations have been denied by NAFTA.
- Foreign Affairs and International Trade Canada. “NAFTA Free Trade Commission Meeting Vancouver.” August 13–14, 2007. www.international.gc.ca/commerce/nafta/menu-en.asp.
- Lederman, Daniel,William F. Maloney, and Luis Servén. Lessons from NAFTA for Latin American and the Caribbean: A Summary of Research Findings. World Bank. 2003. http://lnweb90.worldbank.org/CAW/ Cawdoclib.nsf/0/BC1B10FC17938F3B85256C5E00691B00/$file/NAFTA+Introduction+_Executive+Summary_+P077128.pdf.
- NAFTA Secretariat. “Frequently Asked Questions.” April 3, 2009. www.nafta-sec-alena.org/en/view.aspx?conID=775.
- North American Free Trade Agreement. Web site jointly produced by the governments of Canada, the United States, and Mexico. www.naftanow.org.
- North American Forum on Integration. “NAFTA Timeline.” n.d. www.fina-nafi.org/eng/integ/chronologie.asp?langue=eng&menu= integ#accordNA.
- Office of the United States Trade Representative. “North American Free Trade Agreement (NAFTA).” www.ustr.gov/trade-agreements/freetrade-agreements/north-american-free-trade-agreement-nafta.
- United States Department of Agriculture, Foreign Agricultural Service. “Factsheet: North American Free Trade Agreement (NAFTA).” January 2008. www.fas.usda.gov/info/factsheets/NAFTA.asp.