What is NAFTA?:
NAFTA is short for the North American Free Trade Agreement. NAFTA covers Canada, the U.S. and Mexico making it the world’s largest free trade area in terms of GDP. As of January 1, 2008, all tariffs between the three countries have have been eliminated. Between 1993-2007, trade tripled from $297 billion to $930 billion. (Source: USTR, U.S. - Mexican Officials Meet to Discuss NAFTA, January 11, 2008; NAFTA: Myth versus Fact, March 18, 2008)When Was NAFTA Started?:
NAFTA was signed by U.S. President George H.W. Bush, Mexican President Salinas, and Canadian Prime Minister Brian Mulroney in 1992. It was ratified by the legislatures of the three countries in 1993. The U.S. House approved it by 234 to 200 on November 17 and the Senate by 60 to 38 on November 20. It was signed into law by President Bill Clinton on December 8, 1993 and entered force January 1,1994. Although it was started by President Bush, it was a priority of President Clinton's, and its passage is considered one of his first successes. (Source: History.com, NAFTA Signed into Law, December 8, 1993.How Was NAFTA Started?:
The impetus for NAFTA actually began with President Ronald Regan, who campaigned on a North American common market. In 1984, Congress passed the Trade and Tariff Act. This is important because it gave the President "fast-track" authority to negotiate free trade agreements, while while only allowing Congress the ability to approve or disapprove, not change negotiating points. Canadian Prime Minister Mulroney agrees with Reagan to begin negotiations for the Canada-U.S. Free Trade Agreement, which was signed in 1988, went into effect in 1989 and is now suspended due to NAFTA. (Source: NaFina, NAFTA Timeline)Meanwhile, Mexican President Salinas and President Bush began negotiations for a liberalized trade between the two countries. Prior to NAFTA, Mexican tariffs on U.S. imports were 250% higher than U.S. tariffs on Mexican imports. In 1991, Canada requests a trilateral agreement, which then led to NAFTA. In 1993, concerns about liberalization of labor and environmental regulations led to the adoption of two addendums to NAFTA. (Source: Infoplease.com, NAFTA)
Why Was NAFTA Formed?:
Article 102 of the NAFTA agreement outlines its purpose:- Grant the signatories Most Favored Nation status.
- 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.
- Create procedures for the resolution of trade disputes.
- Establish a framework for further trilateral, regional and multilateral cooperation to expand NAFTA's benefits.
