North American Free Trade Agreement (NAFTA)

A trade agreement between Canada, the United States and Mexico that encourages free trade between these North American countries. The agreement, implemented on January 1, 1994, is based on the principle that removing as many tariffs as possible between these North American countries will increase trade within the region and benefit each country's economy. It has since been updated with two major additions, the North American Agreement for Economic Cooperation (NAAEC) and the North American Agreement for Labor Cooperation (NAALC). A very recent addition was the Security and Prosperity Partnership of North America, to encourage cooperation on issues of national security. One important thing that NAFTA did right away was to eliminate a large number of tariffs on goods shipped between the three countries. American goods mostly were being sold to Canada and especially to Mexico and carried with them a high tariff. Mexico and Canada did not wish to pay the tariffs, so the goods were not sold in North America. Prime examples of these goods were cars, car parts, computers, and food. As a result of NAFTA, Mexico especially has purchased goods from the US in much greater numbers than before. This saves Mexican companies money on imports, and it saves American companies money on export shipping costs. One prime benefit of NAFTA is that goods shipped between the three countries have labels printed in three languages French, Spanish, and English. The English is for Canada and the US, the Spanish is for Mexico, and the French is for Quebec and other French-speaking parts of Canada. Benefit for Mexico is that the NAFTA agreement also encourages greater immigration between the three countries. NAFTA member countries are: The United States The United States of America

Mexico Mexico, the country in North America

Canada Canada, the country in North America

History of NAFTA
NAFTA is short for the North American Free Trade Agreement. NAFTA covers Canada, the U.S. and Mexico making it the worlds largest free trade area in term of GDP. NAFTA was launched to reduce trading costs, increase business investment, and help North America is more competitive in the global marketplace. January 1, 2008, all tariffs between the three countries were eliminated. Between 1993-2007, trade from $297 billion to $1 trillion. When Was NAFTA Started? NAFTA was signed by President George H.W. Bush, Mexican President Salinas, and Canadian Prime Minister Brian Mulroney in 1992. It was ratify by the legislature of the three countries in 1993. It was signed into law by President Bill Clinton on December 8, 1993 and entered force January 1, 1994. It was signed by President Bush, it was a priority of President Clinton's, and its passage is considered one of his first successes. Why Was NAFTA Formed?

Eliminate barriers to trade and facilitate the cross-border movement of goods and services. Promote conditions of fair competition. Increase investment opportunities. Provide protection and enforcement of intellectual property rights.

Has NAFTA Fulfilled Its Purpose? NAFTA has eliminated trade barriers, increased investment opportunities, and established procedures for resolution of trade disputes. Most important, it has increased the competitiveness of the three countries involved on the global marketplace. This has become especially important with the launch of the European Union. In 2007, the EU replaced the U.S. as the world's largest economy. Positive Impacts of NAFTA The creation of NAFTA practically eliminated high tariffs for goods and services that were transported over the borders between the United States, Canada and Mexico. The elimination of tariffs reduced inflation which reduced the cost of imports. Due to the elimination of tariffs the flow of goods and services between the three countries was not slowed down. This act encouraged trade between and increased capital for foreign investors. NAFTA has been especially helpful in agriculture in increasing U.S. exports to Mexico. Mexico is the prime exporter of rice, beef, beans and apples. It is also the second largest exporter for corn, oils and soya beans. Because of NAFTA the U.S. agricultural exports to Canada and Mexico have grown extremely.

Objectives of NAFTA
The objectives of this Agreement are: (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 their territories. (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, and for its joint administration and 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.