North American Free Trade

Agreement
(NAFTA)
 NAFTA
•signed by the three governments on 17 December
1992
• Implemented on January 1, 1994. 
• trade-liberalization agreement among members viz.
• United States,
• Canada, and
• Mexico
• progressively eliminates most tariff and nontariff
barriers to trade between these countries
• transition period from January 1, 1994 to January 1,
2008
• facilitates cross-border investment,
• SPS for trade be scientifically based,
• cooperation regarding the environment and labor.
 NAFTA
• structured as three bilateral agreements,
– one between Canada and the United States,
– second between Mexico and the United States,
– third between Canada and Mexico.
The first accord is CFTA, which took effect
on January 1, 1989, and is subsumed by
NAFTA.
• The second and third agreements are found
in NAFTA itself, which took effect on January
1, 1994.
 Benefits of NAFTA
– Dismantling trade barriers = market
integration
– Canada is # 1 U.S. export market
– Mexico is # 2 U.S. export market
– U.S. is #1 export market for both Canada
and Mexico
 FEATURES OF NAFTA
• Goes beyond regional trade & investment agreement
• agricultural trade liberalization.
• Government Procurement
• Trade in services
• Mexico has opened its financial sector to companies
from US and Canada removed all restrictions by
2007
• treatment of foreign investors.
– treat foreign investors from the other NAFTA countries no
less favorably than it treats its own domestic investors.
 NAFTA : ACHIEVEMENTS
• From 1993 to 2005, trade among the
NAFTA nations increased by 173
percent $810 billion
2005

$297 billion
1993
US Merchandise Export : Growth

133 percent
77 percent.

NAFTA Partners ROW

 Real GDP Growth for NAFTA
Partners (1993 to 2005):

• U.S. Growth: 48%

• Mexico’s Growth: 40%
• Canada’s Growth: 49%
 Institutional Structure
• NAFTA Free Trade Commission (FTC)
– cabinet-level representatives
– meet at least once a year
– implementation of the Agreement and resolve any
disputes

• Secretariat
– support the FTC and any working groups or
committees established by it;
– administrative assistant for NAFTA's dispute
settlement
– panels and related committees;
– Depository for any investment-related disputes.
 Institutional Structure
• The Committee on Sanitary and Phytosanitary
Measures (SPS)
– Facilitate technical cooperation for the enhancement
of food safety, and to hold consultations on sanitary
and phytosanitary measures.
• The Commission for Environmental Cooperation
(CEC)
– regional environmental concerns,
– promote the effective enforcement of environmental
laws.
 Institutional Structure
• Committee on Standards-Related
Measures (CSRM)
• implementation and administration of
– Technical Barriers to Trade,
– consider non-governmental developments in
standards-related measures,