North American Free Trade Agreement

North American Free Trade Agreement (NAFTA), accord establishing a free-trade zone in North America; it was signed in 1992 by Canada, Mexico, and the United States and took effect on Jan. 1, 1994. NAFTA immediately lifted tariffs on the majority of goods produced by the signatory nations. It also calls for the gradual elimination, over a period of 15 years, of most remaining barriers to cross-border investment and to the movement of goods and services among the three countries. Major industries affected include agriculture, automobile and textile manufacture, telecommunications, financial services, energy, and trucking. NAFTA also provides for labor and environmental cooperation among member countries. The pact contains provisions for the inclusion of additional member nations. Labor representatives have criticized NAFTA, claiming the agreement has led to numerous jobs lost in the United States because industries have moved plants to Mexico (see maquiladoras); NAFTA proponents point to the U.S. jobs created because of increased imports by Mexico and Canada. The agreement has negatively affected the economies of several Caribbean countries whose exports to the United States now compete with duty-free Mexican exports.

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NAFTA

 in full North American Free Trade Agreement

Trade pact signed by Canada, the U.S., and Mexico in 1992, which took effect in 1994. Inspired by the success of the European Community in reducing trade barriers among its members, NAFTA created the world's largest free-trade area. It basically extended to Mexico the provisions of a 1988 Canada-U.S. free-trade agreement, calling for elimination of all trade barriers over a 15-year period, granting U.S. and Canadian companies access to certain Mexican markets, and incorporating agreements on labour and the environment. See also General Agreement on Tariffs and Trade; World Trade Organization.