North American Free Trade Agreement

The North American Free Trade Agreement (NAFTA; French Accord de libre échange nord-américain, ALÉNA; Spanish Tratado de Libre Comercio de América del Norte, TLCAN) was an economic agreement between Canada, the United States and Mexico; they thereby form a free trade area on the North American continent. NAFTA was established on January 1, 1994.

NAFTA has been challenged during the 2008 presidential campaign by future US President Barack Obama and in 2016 by US President Donald Trump. On 27 August 2018, it was announced that the US and Mexico had reached an agreement on a new deal. Negotiations for the accession of Canada as a third partner were successfully concluded on 30 September 2018, but the outcome still required ratification by the respective parliaments to be valid. On November 30, 2018, U.S. President Donald Trump, his outgoing Mexican counterpart Enrique Peña Nieto, and Canada's Prime Minister Justin Trudeau signed the successor agreement to the North American Free Trade Agreement (Nafta). The new agreement is known in English as the United States-Mexico-Canada Agreement (USMCA), in Spanish as the Acuerdo Estados Unidos-México-Canadá (AEUMC) and in French as the Accord États-Unis-Mexique-Canada (AÉUMC) and entered into force on 1 July 2020.

With the entry into force of the NAFTA trade agreement, numerous tariffs were abolished and many others were suspended. The agreement emerged from the Canada-US Free Trade Agreement of 1989. It is an intergovernmental treaty. Unlike the European Union, NAFTA does not exercise supranational governmental functions and its provisions do not take precedence over national law.

NAFTA has two subsidiary agreements: The North American Agreement on Environmental Cooperation (NAAEC) for environmental concerns and the North American Agreement on Labor Cooperation (NAALC) for labor rights.

Predecessor: Canada-US Free Trade Agreement

The forerunner of the North American Free Trade Agreement was the Canada-US Free Trade Agreement (CUSFTA), which came into force on 1 January 1989 and linked the two economically strongest countries in North America. The formation of the CUSFTA was the result of an initiative by Republican U.S. President Ronald Reagan. The plan for a free trade area between the two countries was viewed critically by both the Liberal Party of Canada and the New Democratic Party of Canada in the run-up to the agreement and after it came into force, and public opinion in Canada was also predominantly negative, especially at the beginning.

Content

NAFTA provides for the elimination of most tariffs between member countries within 15 years of entry into force. Most trade between the US and Canada was already duty-free before. The main difference between NAFTA and previous agreements was that measures on other issues (apart from tariffs and quotas) were also adopted in the trade agreement.

By 2008, such non-tariff barriers to trade should be eliminated. The agreement provides for the opening of various markets (including the banking, energy and transport sectors) of the participating states to companies from the other member states. This also includes the awarding of public contracts. Standards for food and product safety, for example, were also lowered. Another aim of the agreement was to strengthen the protection of intellectual property, for example in the area of medical patents.

NAFTA also contains rules on investment protection and provides for the possibility of initiating investment arbitration proceedings if companies' profit expectations are reduced by new legislation.