The North American Free Trade Agreement (, TLCAN; , ALÉNA), referred to colloquially in the Anglosphere as NAFTA ( ), was an agreement signed by Canada, Mexico, and the United States that created 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 The agreement came into force on January 1, 1994, and superseded the 1988 Canada–United States Free Trade Agreement between the United States and Canada.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 formed 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 United States, 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 indicated that NAFTA was beneficial to the North American economies and the average citizen, but harmed a small minority of workers in industries exposed to trade competition. Economists held that withdrawing from NAFTA or renegotiating NAFTA in a way that reestablished trade barriers would have adversely affected the U.S. economy and cost jobs. However, Mexico would have been much more severely affected by job loss and reduction of economic growth in both the short term and long term.
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), and all three countries had ratified it by March 2020. NAFTA remained in force until USMCA was implemented. In April 2020, Canada and Mexico notified the U.S. that they were ready to implement the agreement.CBC News, "Mexico joins Canada, notifies U.S. it's ready to implement new NAFTA" 2020/04/04 accessed 06 April 2020 The USMCA took effect on July 1, 2020, replacing NAFTA.
Negotiation, signing, ratification, and revision (1988–1994) Negotiation 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. 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 U.S. president George H. W. Bush to propose a similar agreement in an effort to bring in foreign investment following the Latin American debt crisis. 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.Foreign Affairs and International trade Canada: Canada and the World: A History – 1984–1993: "Leap of Faith
Signing
Following diplomatic negotiations dating back to 1990, the leaders of the three nations signed the agreement in their respective capitals on December 17, 1992. The signed agreement then needed to be ratified by each nation's legislative or parliamentary branch.
Ratification Canada 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. Mulroney subsequently negotiated two supplemental agreements with Bush, who had subverted the LACLabor Advisory Committee for Trade Negotiations and Trade Policy; established under the Trade Act of 1974. advisory processPreliminary Report of the Labor Advisory Committee for Trade Negotiations and Trade Policy on the North American Free Trade Agreement , dated Sept. 16, 1992 (Washington, D.C.: Executive Office of the President, Office of the U.S. Trade Representative, 1992), i, 1. 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.For an overview of the process, see Noam Chomsky, Mandate for Change', or Business as Usual" , Z Magazine 6, no. 2 (February 1993), 41.
United States
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. 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. Senate supporters were 34 Republicans and 27 Democrats. Republican Representative David Dreier of California, a strong proponent of NAFTA since the Reagan administration, played a leading role in mobilizing support for the agreement among Republicans in Congress and across the country.
Chicago Congressman Luis Gutiérrez in particular was a vocal opponent of NAFTA, ultimately voting against the measure because of what he considered its failure to sufficiently provide for displaced worker retraining, protections against American job loss, and protections of collective bargaining rights for Mexican workers.Luis Gutierrez on Why Rahm Emanuel Should Not Be Mayor , Chicago Magazine, Carol Felsenthal, January 11, 2011. Retrieved July 2, 2022. He criticized the role of Rahm Emanuel in particular for the deficiencies.
The U.S. required its partners to adhere to environmental practices and regulations similar to its own.Learning From The Experience Of NAFTA Labor And Environmental Governance , Forbes Magazine, Mark Aspinwall, August 10, 2017. Retrieved July 1, 2022.
Clinton signed it into law on December 8, 1993; the agreement went into effect on January 1, 1994. At the signing ceremony, Clinton recognized four individuals for their efforts in accomplishing the historic trade deal: Vice President Al Gore, Chairwoman of the Council of Economic Advisers Laura Tyson, Director of the National Economic Council Robert Rubin, and Republican Congressman David Dreier. Clinton also stated that "NAFTA means jobs. American jobs, and good-paying American jobs. If I didn't believe that, I wouldn't support this agreement." NAFTA replaced the previous Canada-US FTA.
Mexico NAFTA (TLCAN in Spanish) was approved by the Mexican Senate on November 22, 1993, and was published in the Official Gazette of the Federation on December 8, 1993.
The decree implementing NAFTA and the various changes to accommodate NAFTA in Mexican law was promulgated on December 14, 1993, with entry into force on January 1, 1994.
Provisions
The goal of NAFTA was to eliminate barriers to trade and investment between the United States, Canada and Mexico. The implementation of NAFTA on January 1, 1994, brought the immediate elimination of tariffs on more than one-half of Mexico's exports to the U.S. and more than one-third of U.S. exports to Mexico. Within 10 years of the implementation of the agreement, all U.S.–Mexico tariffs were to be eliminated except for some U.S. agricultural exports to Mexico, to be phased out within 15 years.Floudas, Demetrius Andreas & Rojas, Luis Fernando; "Some Thoughts on NAFTA and Trade Integration in the American Continent" , 52 (2000) International Problems 371 Most U.S.–Canada trade was already duty-free. NAFTA also sought to eliminate non-tariff trade barriers and to protect the intellectual property rights on traded products.
Chapter 20 provided a procedure for the international resolution of disputes over the application and interpretation of NAFTA. It was modeled after Chapter 69 of the Canada–United States Free Trade Agreement.
NAFTA is, in part, implemented by Technical Working Groups composed of government officials from each of the three partner nations.
Intellectual property The North American Free Trade Agreement Implementation Act made some changes to the copyright law of the United States, foreshadowing the Uruguay Round Agreements Act of 1994 by restoring copyright (within the NAFTA nations) on certain motion pictures which had entered the public domain.GPO, P.L. 103-182 , Section 334ML-497 (March 1995), Docket No. RM 93-13C, Library of Congress Copyright Office
Environment The Clinton administration negotiated a side agreement on the environment with Canada and Mexico, the North American Agreement on Environmental Cooperation (NAAEC), which led to the creation of the Commission for Environmental Cooperation (CEC) in 1994. To alleviate concerns that NAFTA, the first regional trade agreement between a developing country and two developed countries, would have negative environmental impacts, the commission was mandated to conduct ongoing ex post environmental assessment, It created one of the first ex post frameworks for environmental assessment of trade liberalization, designed to produce a body of evidence with respect to the initial hypotheses about NAFTA and the environment, such as the concern that NAFTA would create a "race to the bottom" in environmental regulation among the three countries, or that NAFTA would pressure governments to increase their environmental protections.Analytic Framework for Assessing the Environmental Effects of the North American Free Trade Agreement. Commission for Environmental Cooperation (1999) The CEC has held four symposia to evaluate the environmental impacts of NAFTA and commissioned 47 papers on the subject from leading independent experts.
Labor Proponents of NAFTA in the United States emphasized that the pact was a free-trade, not an economic-community, agreement. The freedom of movement it establishes for goods, services and capital did not extend to labor. In proposing what no other comparable agreement had attempted—to open industrialized countries to "a major Third World country"—NAFTA eschewed the creation of common social and employment policies. The regulation of the labor market and or the workplace remained the exclusive preserve of the national governments.