North American Free Trade Agreement

North American Free Trade Agreement

  • Tratado de Libre Comercio de América del Norte  (Spanish)
  • Accord de Libre-échange Nord-Américain  (French)
Logo of the NAFTA Secretariat of North American Free Trade Agreement
Logo of the NAFTA Secretariat
Location of North American Free Trade Agreement
Languages
TypeFree trade area
Member states
EstablishmentJanuary 1, 1994; 25 years ago (1994-01-01)[1]
Area
• Total
21,578,137 km2 (8,331,365 sq mi)
• Water (%)
7.4
Population
• 2018 estimate
490,000,000
• Density
22.3/km2 (57.8/sq mi)
GDP (PPP)2018 estimate
• Total
$24.8 trillion[2]
• Per capita
$50,700
NAFTA GDP – 2012 : IMF – World Economic Outlook Databases (Oct 2013)

The North American Free Trade Agreement (NAFTA; Spanish: Tratado de Libre Comercio de América del Norte, TLCAN; French: Accord de libre-échange nord-américain, ALÉNA) is an agreement signed by Canada, Mexico, and the United States, creating a trilateral trade bloc in North America. The agreement came into force on January 1, 1994, and superseded the 1988 Canada–United States Free Trade Agreement between the United States and Canada. The NAFTA trade bloc is one of the largest trade blocs in the world by gross domestic product.

The impetus for a North American free trade zone began with U.S. President Ronald Reagan, who made the idea part of his 1980 presidential campaign. After the signing of the Canada–United States Free Trade Agreement in 1988, the administrations of U.S. President George H. W. Bush, Mexican President Carlos Salinas de Gortari, and Canadian Prime Minister Brian Mulroney agreed to negotiate what became NAFTA. Each submitted the agreement for ratification in their respective capitals in December 1992, but NAFTA faced significant opposition in both the United States and Canada. All three countries ratified NAFTA in 1993 after the addition of two side agreements, the North American Agreement on Labor Cooperation (NAALC) and the North American Agreement on Environmental Cooperation (NAAEC).

Passage of NAFTA resulted in the elimination or reduction of barriers to trade and investment between the U.S., Canada, and Mexico. The effects of the agreement regarding issues such as employment, the environment, and economic growth have been the subject of political disputes. Most economic analyses indicate that NAFTA has been beneficial to the North American economies and the average citizen,[4][5][6] but has harmed a small minority of workers in industries exposed to trade competition.[7][8] Economists hold that withdrawing from NAFTA or renegotiating NAFTA in a way that reestablishes trade barriers would adversely affect the U.S. economy and cost jobs.[9][10][11] However, Mexico would be much more severely affected by job loss and reduction of economic growth in both the short term and long term.[12]

After U.S. President Donald Trump took office in January 2017, he sought to replace NAFTA with a new agreement, beginning negotiations with Canada and Mexico. In September 2018, the United States, Mexico, and Canada reached an agreement to replace NAFTA with the United States–Mexico–Canada Agreement (USMCA). NAFTA will remain in force, pending the ratification of the USMCA.[13]

Negotiation, ratification, and revision (1988–94)

The impetus for a North American free trade zone began with U.S. President Ronald Reagan, who made the idea part of his campaign when he announced his candidacy for the presidency in November 1979.[14] Canada and the United States signed the Canada–United States Free Trade Agreement (FTA) in 1988, and shortly afterward Mexican President Carlos Salinas de Gortari decided to approach US president George H. W. Bush to propose a similar agreement in an effort to bring in foreign investment following the Latin American debt crisis.[14] As the two leaders began negotiating, the Canadian government under Prime Minister Brian Mulroney feared that the advantages Canada had gained through the Canada–US FTA would be undermined by a US–Mexican bilateral agreement, and asked to become a party to the US–Mexican talks.[15]

Back row, left to right: Mexican President Carlos Salinas de Gortari, U.S. President George H. W. Bush, and Canadian Prime Minister Brian Mulroney, at the initialing of the draft North American Free Trade Agreement in October 1992. In front are Mexican Secretary of Commerce and Industrial Development Jaime Serra Puche, United States Trade Representative Carla Hills, and Canadian Minister of International Trade Michael Wilson.

Following diplomatic negotiations dating back to 1990, the leaders of the three nations signed the agreement in their respective capitals on December 17, 1992.[16] The signed agreement then needed to be ratified by each nation's legislative or parliamentary branch.

The earlier Canada–United States Free Trade Agreement had been controversial and divisive in Canada, and featured as an issue in the 1988 Canadian election. In that election, more Canadians voted for anti-free trade parties (the Liberals and the New Democrats), but the split of the votes between the two parties meant that the pro-free trade Progressive Conservatives (PCs) came out of the election with the most seats and so took power. Mulroney and the PCs had a parliamentary majority and easily passed the 1987 Canada–US FTA and NAFTA bills. However, Mulroney was replaced as Conservative leader and prime minister by Kim Campbell. Campbell led the PC party into the 1993 election where they were decimated by the Liberal Party under Jean Chrétien, who campaigned on a promise to renegotiate or abrogate NAFTA. Chrétien subsequently negotiated two supplemental agreements with Bush, who had subverted the LAC[17] advisory process[18] and worked to "fast track" the signing prior to the end of his term, ran out of time and had to pass the required ratification and signing of the implementation law to incoming president Bill Clinton.[19]

Before sending it to the United States Senate Clinton added two side agreements, the North American Agreement on Labor Cooperation (NAALC) and the North American Agreement on Environmental Cooperation (NAAEC), to protect workers and the environment, and to also allay the concerns of many House members. The U.S. required its partners to adhere to environmental practices and regulations similar to its own.[citation needed] After much consideration and emotional discussion, the U.S. House of Representatives passed the North American Free Trade Agreement Implementation Act on November 17, 1993, 234–200. The agreement's supporters included 132 Republicans and 102 Democrats. The bill passed the Senate on November 20, 1993, 61–38.[20] Senate supporters were 34 Republicans and 27 Democrats. Clinton signed it into law on December 8, 1993; the agreement went into effect on January 1, 1994.[21][22] Clinton, while signing the NAFTA bill, stated that "NAFTA means jobs. American jobs, and good-paying American jobs. If I didn't believe that, I wouldn't support this agreement."[23] NAFTA then replaced the previous Canada-US FTA.

Other Languages
Afrikaans: NAFTA
العربية: نافتا
беларуская: НАФТА
čeština: NAFTA
eesti: NAFTA
føroyskt: NAFTA
客家語/Hak-kâ-ngî: Pet-mî Chhṳ-yù Mo-yi Hia̍p-ngi
norsk: NAFTA
slovenščina: Sporazum NAFTA
suomi: NAFTA