NAFTA

North American Free Trade Agreement

Under the leadership of President Donald J. Trump, the United States renegotiated the
North American Free Trade Agreement, replacing it with an updated and rebalanced
agreement that works much better for North America,

the United States-Mexico-

Canada Agreement
(USMCA), which entered into force on
July 1, 2020
(NAFTA).
The USMCA has replaced the NAFTA.
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 What is NAFTA?:

• NAFTA is short form 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). NAFTA was launched above
15 years ago to reduce trading costs, increase
business investment, and help North America be
more competitive in the global marketplace.
• As of January 1, 2008, all tariffs between the three
countries were eliminated.
• Between 1993-2009, trade tripled from $297
billion to $1.6 trillion. (Source: USTR, NAFTA)
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 When was the NAFTA signed?
The NAFTA was signed at:
• Ottawa, on the 11th day and the 17th day of
December 1992, 
• Mexico, D.F., on the 14th day and the 17th day of
December 1992, 
• Washington, D.C., on the 8th day and the 17th day
of December 1992.
Administrative center
• Mexico City, Ottawa, and Washington D.C.
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When Was NAFTA Started?
NAFTA was signed by President George H.W. Bush, Mexican President
Salinas, and Canadian Prime Minister Brian Mulroney in 1992.
• It was ratified (made legal) by the legislatures of the three countries in
1993. The 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 signed by President Bush, it was a priority of President
Clinton's, and its passage is considered one of his first successes.

When Did the NAFTA enter into force?

The North American Free Trade Agreement (NAFTA) between Canada,

the United States and Mexico entered into force on January 1,
1994.
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 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 only allowing Congress the ability to
approve or disapprove, not change negotiating points.
• Canadian Prime Minister Mulroney agreed 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 requested 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)
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 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.
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 PART ONE: GENERAL PART

• Article 101 : Establishment of the Free Trade

Area 
Article 102 : Objectives 
Article 103 : Relation to Other Agreements 
Article 104 : Relation to Environmental and
Conservation Agreements 
Article 105 : Extent of Obligations 
Annex 104.1 : Bilateral and Other
Environmental and Conservation Agreements

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Article 101: Establishment of the Free Trade Area
• The Parties to this Agreement, consistent with Article XXIV of the General
Agreement on Tariffs and Trade , hereby establish a free trade area.
Article 102: Objectives
1. The objectives of this Agreement, as elaborated more specifically through its
principles and rules, including national treatment, most-favored-nation treatment
and transparency, are to:
• a) eliminate barriers to trade in, and facilitate the cross-border movement of,
goods and services between the territories of the Parties;
• b) promote conditions of fair competition in the free trade area;
• c) increase substantially investment opportunities in the territories of the Parties;
• d) provide adequate and effective protection and enforcement of intellectual
property rights in each Party's territory;
• e) create effective procedures for the implementation and application of this
Agreement, for its joint administration and for the resolution of disputes; and
• f) establish a framework for further trilateral, regional and multilateral
cooperation to expand and enhance the benefits of this Agreement.
2. The Parties shall interpret and apply the provisions of this Agreement in the light
of its objectives set out in paragraph 1 and in accordance with applicable rules of
international law.
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Article 103: Relation to Other Agreements
• 1. The Parties affirm their existing rights and obligations with
respect to each other under the General Agreement on Tariffs and
Trade and other agreements to which such Parties are party.
• 2. In the event of any inconsistency between this Agreement and
such other agreements, this Agreement shall prevail to the extent of
the inconsistency, except as otherwise provided in this Agreement.
Article 105: Extent of Obligations
• The Parties shall ensure that all necessary measures are taken in
order to give effect to the provisions of this Agreement, including
their observance, except as otherwise provided in this Agreement,
by state and provincial governments.

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Article 104: Relation to Environmental and Conservation Agreements
1. In the event of any inconsistency between this Agreement and the specific
trade obligations set out in:
• a) the Convention on International Trade in Endangered Species of Wild Fauna
and Flora , done at Washington, March 3, 1973, as amended June 22, 1979,
• b) the Montreal Protocol on Substances that Deplete the Ozone Layer , done
at Montreal, September 16, 1987, as amended June 29, 1990,
• c) the Basel Convention on the Control of Trans-boundary Movements of
Hazardous Wastes and Their Disposal , done at Basel, March 22, 1989, on its
entry into force for Canada, Mexico and the United States, or
• d) the agreements set out in Annex 104.1,
• such obligations shall prevail to the extent of the inconsistency, provided that
where a Party has a choice among equally effective and reasonably available
means of complying with such obligations, the Party chooses the alternative
that is the least inconsistent with the other provisions of this Agreement.
2. The Parties may agree in writing to modify Annex 104.1 to include any
amendment to an agreement referred to in paragraph 1, and any other
environmental or conservation agreement.

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Annex 104.1
Bilateral and Other Environmental and Conservation
Agreements
1. The Agreement Between the Government of Canada
and the Government of the United States of America
Concerning the Trans-boundary Movement of
Hazardous Waste , signed at Ottawa, October 28,
1986.
2. The Agreement Between the United States of
America and the United Mexican States on
Cooperation for the Protection and Improvement of
the Environment in the Border Area , signed at La
Paz, Baja California Sur, August 14, 1983.
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PART TWO: TRADE IN GOODS
• Article 401 : Originating Goods 
Article 402 : Regional Value Content 
Article 403 : Automotive Goods 
Article 404 : Accumulation 
Article 405 : De Minimis 
Article 406 : Fungible Goods and Materials 
Article 407 : Accessories, Spare Parts and Tools 
Article 408 : Indirect Materials 
Article 409 : Packaging Materials and Containers for Retail Sale 
Article 410 : Packing Materials and Containers for Shipment 
Article 411 : Transshipment 
Article 412 : Non-Qualifying Operations 
Article 413 : Interpretation and Application 
Article 414 : Consultation and Modifications 
Article 415 : Definitions 
• Annex 401 : Specific Rules of OriginAnnex 403.1 : List of Tariff Provisions
for Article 403(1) 
Annex 403.2 : List of Components and Materials 
Annex 403.3 : Regional Value-Content Calculation for CAMI 
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 What Are the Advantages of NAFTA?:

NAFTA created the world’s largest free trade area, linking 444 million people and
producing $17 trillion in goods and services annually. Estimates are that NAFTA
increases U.S. GDP by as much as .5% a year.
That's because it eliminates tariffs and creates agreements on international rights
for business investors. This reduces the cost of trade, which spurs investment
and growth especially for small businesses. Eliminating tariffs also reduces
inflation by decreasing the costs of imports. (Source: USTR, Quantification of
NAFTA Benefits)
Increased Trade:
• Trade between the NAFTA signatories tripled, from $297 billion in 1993 to $1
trillion in 2007 (latest data available).
• Exports from the U.S. to Canada and Mexico grew from $142 billion to $452
billion.
• Exports from Canada and Mexico to the U.S. increased from $151 billion to
$568 billion.
• The trade grew because NAFTA provided the ability for firms in member
countries to bid on government contracts. It also protected intellectual
properties.
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Boosted U.S. Farm Exports:
• NAFTA increased farm exports because it eliminated high Mexican tariffs.
Mexico is the top export destination for beef, rice, soybean meal, corn
sweeteners, apples and beans.
• It is the second largest for corn, soybeans and oils.
• As a result of NAFTA, the percent of U.S. agricultural exports to Canada and
Mexico has grown from 22% in 1993 to 30% in 2007. (Source: USTR, NAFTA
Facts, March 2008)
Created Trade Surplus in Services:
• More than 40% of U.S. GDP is services, such as financial services and health
care. These aren't easily transported, so being able to export them to nearby
countries is important.
• NAFTA boosted U.S. service exports to Canada and Mexico from $25 billion
in 1993 to $106.8 billion in 2007.
• Service exports were $40 billion.
• NAFTA eliminated trade barriers in nearly all service sectors, which are often
highly regulated. NAFTA requires governments to publish all regulations,
lowering hidden costs of doing business.

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Reduced Oil and Grocery Prices:
• The U.S. imported $157.8 billion in oil from Mexico and Canada (shale
oil).This also reduces U.S. reliance on oil imports from the Middle East
and Venezuela. It is especially important now that the U.S. no longer
imports oil from ME&V. Why? Mexico is a friendly country, whereas
Venezuela's president often criticizes the U.S. Both Venezuela and Iran
have started selling oil in currencies other than the dollar, contributing to
the decline in the dollar's value.
• Since NAFTA eliminates tariffs, oil prices are lower. The same is true for
food imports, which totaled $28.9 billion in 2008.
Stepped Up Foreign Direct Investment:
• Since NAFTA was enacted, U.S. foreign direct investment (FDI) in Canada
and Mexico more than tripled to $348.7 billion (as of 2007, latest data
available). Canadian and Mexican FDI in the U.S. grew to $219.2 billion.
• NAFTA reduces investors' risk by guaranteeing they will have the same
legal rights as local investors. Through NAFTA, investors can make legal
claims against the government if it nationalizes their industry or takes
their property by eminent domain. (Source: USTR, NAFTA Section Index)
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 Disadvantages of NAFTA:

Increase in Competition
NAFTA made it possible for many U.S. manufacturers
to move jobs to lower-cost Mexico. The domestic
manufacturers in Mexico faced stiff competition.
Farmer’s plight
Many of Mexico's farmers were put out of business
by U.S.-subsidized farm products. NAFTA provisions
for Mexican labor and environmental protection
were not strong enough to prevent those workers
from being exploited.

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U.S. Jobs Were Lost:
• Since labor was cheaper in Mexico, many manufacturing
industries moved part of their production from high-cost U.S.
states.
• Between 1994 and 2010, the U.S. trade deficits with Mexico
totaled $97.2 billion, displacing 682,900 U.S. jobs. (However,
116,400 occurred after 2007, and could have been a result of
the financial crisis.)
• Nearly 80% of the losses were in manufacturing. California,
New York, Michigan and Texas were hit the hardest because
they had high concentrations of the industries that moved
plants to Mexico.
• These industries included motor vehicles, textiles, computers,
and electrical appliances. (Source: Economic Policy Institute,
"The High Cost of Free Trade," May 3, 2011)

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U.S. Wages Were Suppressed:
• Not all companies in these industries moved to Mexico. The ones that used
the threat of moving during union organizing drives.
• When it became a choice between joining the union or losing the factory,
workers chosen the factory. Without union support, the workers had little
bargaining power. This suppressed wage growth.
• Between 1993 and 1995, 50% of all companies in the industries that were
moving to Mexico used the threat of closing the factory. By 1999, that rate
had grown to 65%.
Mexico's Farmers Were Put Out of Business:
• Thanks to NAFTA, Mexico lost 1.3 million farm jobs. The 2002 Farm Bill
subsidized U.S. agribusiness by as much as 40% of net farm income.
• When NAFTA removed tariffs, corn and other grains were exported to
Mexico below cost. Rural Mexican farmers could not compete.
• At the same time, Mexico reduced its subsidies to farmers from 33.2% of
total farm income in 1990 to 13.2% in 2001. Most of those subsidies went to
Mexico's large farms, anyway.(Source: International Forum on Globalization,
Exposing the Myth of Free Trade, February 25, 2003; The Economist, Tariffs
and Tortillas, January 24, 2008)
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Maquiladora Workers Were Exploited:
• Maquiladoras (Mexican factories that take in imported raw materials and
produce goods for export) have become the landmark of trade in Mexico.
These are plants that moved to this region from the United States, hence the
debate over the loss of American jobs.
• NAFTA expanded the Maquiladora program, in which U.S.-owned companies
employed Mexican workers near the border to cheaply assemble products for
export to the U.S.
• This grew to 30% of Mexico's labor force. These workers have "no labor rights
or health protections, workdays stretch out 12 hours or more, and if you are a
woman, you could be forced to take a pregnancy test when applying for a
job," according to Continental Social Alliance. (Source: Worldpress.org,
Lessons of NAFTA, April 20, 2001)
Mexico's Environment Deteriorated:
• In response to NAFTA competitive pressure, Mexico agribusiness used more
fertilizers and other chemicals, costing $36 billion per year in pollution.
• Rural farmers expanded into more marginal land, resulting in deforestation at
a rate of 630,000 hectares per year. (Source: Carnegie Endowment, NAFTA's
Promise and Reality, 2004) Updated September 10, 2011)
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NAFTA Called for Free Access for Mexican Trucks:
• Another agreement within NAFTA has not been implemented. NAFTA
would have allowed trucks from Mexico to travel within the United States
beyond the current 20-mile commercial zone limit. A demonstration
project by the Department of Transportation (DoT) was set up to review
the practicality of this. In 2008, the House of Representatives terminated
this project, and prohibited the DoT from allowing this provision of NAFTA
to ever be implemented without Congressional approval.
• Congress was concerned that Mexican trucks would have presented a road
hazard. They are not subject to the same safety standards as U.S. trucks. In
addition, this portion of NAFTA was opposed by the U.S. truckers'
organizations and companies, who would have lost business. Currently,
Mexican trucks must stop at the 20-mile limit and have their goods
transferred to U.S. trucks.
• There was also a question of reciprocity. The NAFTA agreement would also
have allowed unlimited access for U.S. trucks throughout Mexico. A similar
agreement works well between the other NAFTA partner, Canada.
However, U.S. trucks are larger and carry heavier loads. This violates size
and weight restrictions imposed by the Mexican government.
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 Impact of NAFTA on Canada
• Canada gained the most from NAFTA with Canada's GDP rate at
3.6%, growing faster than the United States at 3.3% and Mexico
at 2.7%.
• Canadian employment levels have also shown steady gains in
recent years, with overall employment rising from 14.9 million
to 15.7 million in the early 2000s.
• Even Canadian manufacturing employment held steady.
• One of NAFTA's biggest economic effects on U.S.-Canada trade
has been to boost bilateral agricultural flows.
• In the year 2008 alone, Canada exports to the United States and
Mexico was at CAN$381.3 Billion Dollars and imports from
NAFTA was at CAN$245.1 Billion Dollars.
• The Canadian mainstream has been so unanimous in its
recognition of NAFTA's advantages despite a few odd detractors.
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Zapatista Uprising in response to NAFTA in Chiapas, Mexico
• The preparations for NAFTA included cancellation of Article
27 of Mexico's constitution, the cornerstone of Emiliano
Zapata's revolution of 1910-1919. Under the historic Article
27, the communal landholdings were protected from sale
or privatization. But under NAFTA this guarantee was
defined as a barrier to investment. With the removal of
Article 27, the farmers would be threatened with loss of
their remaining lands, and also flooded with cheap imports
(substitutes) from the US. Thus, the Zapatistas labeled
NAFTA as a "death sentence" to communities all over
Mexico. Then EZLN declared war on the Mexican state on
January 1, 1994 the day NAFTA came into force

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• The Zapatista Army of National Liberation (Ejército Zapatista de
Liberación Nacional, EZLN) is a revolutionary leftist group based in
Chiapas, the southernmost state of Mexico.
• Since 1994, the group has been in a declared war "against the
Mexican state," though this war has been primarily nonviolent and
defensive against military, paramilitary, and corporate incursions into
Chiapas Their social base is mostly rural indigenous people but they
have some supporters in urban areas as well as an international web
of support.
• Their main spokesperson is Subcomandante Marcos (currently a.k.a.
Delegate Zero in relation to "the Other Campaign"). Unlike other
Zapatista spokespeople, Marcos is not an indigenous Mayan.
• The group takes its name from Emiliano Zapata, the agrarian
reformer and commander of the Liberation Army of the South during
the Mexican Revolution, and sees itself as his ideological heir. In
reference to inspirational figures, in nearly all EZLN villages exist
murals accompanying images of Zapata, Che Guevara, and
Subcomandante Marcos .......JKCHANDEL@KUK.AC.IN
• 1. What is NAFTA?
• The North American Free Trade Agreement (NAFTA) is a comprehensive trade
agreement that sets the rules of trade and investment between Canada, the
United States, and Mexico. Since the agreement entered into force on January
1, 1994, NAFTA has systematically eliminated most tariff and non-tariff barriers
to free trade and investment between the three NAFTA countries.
• 2. How does NAFTA work?
• NAFTA is a formal agreement that establishes clear rules for commercial
activity between Canada, the United States, and Mexico. NAFTA is overseen by
a number of institutions that ensure the proper interpretation and smooth
implementation of the Agreement’s provisions.
• 3. What are the benefits of NAFTA?
• Since NAFTA came into effect, trade and investment levels in North America
have increased, bringing strong economic growth, job creation, and better
prices and selection in consumer goods. North American businesses,
consumers, families, workers, and farmers have all benefited.
• 4. How can I make NAFTA work for my business?
• NAFTA provides North American businesses with better access to materials,
technologies, investment capital, and talent available across North America.

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• 5. What are the NAFTA rules of origin?
• Each NAFTA country forgoes tariffs on imported goods “originating” in the
other NAFTA countries. Rules of origin enable customs officials to decide which
goods qualify for this preferential tariff treatment under NAFTA. The
negotiators of the Agreement sought to make the rules of origin very clear so
as to provide certainty and predictability to producers, exporters, and
importers. They also sought to ensure that NAFTA’s benefits are not extended
to goods imported from non-NAFTA countries that have undergone only
minimal processing in North America.
• 6. How do I obtain a NAFTA certificate of origin?
• The procedures for presenting a claim to each NAFTA partner are different. To
certify that goods qualify for the preferential tariff treatment under NAFTA, the
exporter must complete a certificate of origin. A producer or manufacturer
may also complete a certificate of origin to be used as a basis for an exporter’s
certificate of origin. To make a claim for NAFTA preference, the importer must
possess a certificate of origin at the time the claim is made.
• Further information on Customs procedures can be obtained by contacting the
Customs administrations of each NAFTA country.

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• 7. Who is permitted temporary entry into another NAFTA country under
the NAFTA rules?
• Chapter 16 of NAFTA permits the temporary cross-border movement of
business travelers within the NAFTA region. Four categories of travelers are
eligible for temporary entry from one NAFTA country into another: business
visitors, traders and investors, intra-company transferees, and professionals.
• 8. How did NAFTA affect tariff rates within North America?
• On January 1, 2008, the last remaining tariffs were removed within North
America. When implemented, NAFTA immediately lifted tariffs on the
majority of goods produced by the NAFTA partners and called for the phased
elimination, over 15 years, of most remaining barriers to cross-border
investment and to the movement of goods and services between the three
countries.
• 9. How can I obtain information on NAFTA Custom procedures?
• Information on Customs procedures can be obtained by contacting the
Customs administrations of each NAFTA country. For more information,
please visit: Canada Border Services Agency, 
U.S. International Trade Administration, and Mexico’s 
Ministry of the Economy (Spanish only).
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NAFTA Partners: Canada and the United States
implemented a free trade pact in 1989. In 1994, NAFTA
broadened the free trade area to include Mexico.
NAFTA Economy: Today NAFTA covers a North American
economy with a combined output of US$17.0 trillion.
NAFTA Population: The NAFTA region is home to 444.1
million people, 33.3 million of whom live in Canada,
304.1 million in the United States, and 106.7 million in
Mexico.
NAFTA Languages: English, Spanish, and French are
languages widely spoken in the NAFTA countries.
However, many other languages are spoken across the
continent.
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Canada: One in five jobs in Canada is in part linked to international
trade, and Canada’s prosperity is built on its openness to
international trade and investment. As such, the North American
continental partnership is without a doubt an important competitive
advantage for Canada. Canada is using this continental platform as a
way to help Canadian business embrace commercial opportunities
around the world.
The United States: The largest and most diversified economy in the
world, the United States is a market economy whose businesses are
world leaders in the manufacturing and high-tech sectors, especially
computers, medical equipment, and aerospace, and in services,
including financial services and telecommunications, and in
agriculture.
Mexico: Trade liberalization has transformed and modernized Mexico’s
vibrant economy by successfully boosting trade and investment flows.
Within just a few years, Mexico’s exports have diversified from
primarily oil to include an array of manufactured products, making
Mexico one of the largest exporters in the world.
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 NAFTA at a Glance

NAFTA Partners Canada U.S. Mexico Combined

Population (July 304.1 106.7 444.1

33.3 million
2008 est.) million million million

English and
Languages English Spanish
French

Gross Domestic
Product, 2008 14,441 1,087
1,501 billion 17.0 trillion
(Current prices, billion billion
US$)

Trade with NAFTA

Partners, 2008 919.9 393.5
570.8 billion 946.1 billion
(Current prices, billion billion
US$)

Inward Foreign
Direct Investment
229.8 156.0 1
Among NAFTA 240.0 billion ---
billion billion
Countries, 2008
(US$)

Jobs Created 1993-

4.3 25.1 9.3 39.7
2008 (millions)

National
Employment Level, 17.1 145.4 43.2 205.7
2008 (millions)

Sources: Statistics Canada - Canada; Department of Commerce and Bureau of Labour Statistics – United States; Instituto Nacional de Estadística,
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Geografía e Informática (INEGI) and Dirección General de Inversión Extranjera de Secretaría de Economía (DGIE-SE)– Mexico.
 Myths and Realities about NAFTA
• A review of the myths and realities surrounding NAFTA reveals the
extent to which its critics have been proven wrong.
Myth 1: NAFTA has not achieved its core goals of expanding trade
and investment between Canada, the United States, and Mexico.
Reality: Since NAFTA came into effect, trade among the NAFTA
countries has more than tripled, reaching US$949.1 billion. In 2008,
Canada and the United States’ inward foreign direct investment
from NAFTA partner countries reached US$469.8 billion. Meanwhile,
Mexico has become one of the largest recipients of foreign direct
investment among emerging markets, and received more than
US$156 billion from its NAFTA partners between 1993 and 2008.
Myth 2: NAFTA has resulted in job losses.
Reality: Since NAFTA came into effect, the overall job growth has been
strong in all three partner countries. Across North America, total
employment has grown by almost 40 million jobs since 1993.
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Myth 3: NAFTA hurts workers by eroding labor standards and lowering wages.
Reality: The NAFTA partners negotiated and implemented a parallel agreement on
labor cooperation, the North American Agreement on Labor Cooperation (NAALC).
The NAALC adds a social dimension to NAFTA. Through the NAALC, the regional
trading partners seek to improve working conditions and living standards, and to
protect, enhance, and enforce basic workers’ rights.
• Over the years, the NAALC has helped to improve working conditions and living
standards in Canada, the U.S., and Mexico. It has also raised the public profile of
major labor rights issues, including pregnancy-based discrimination, secret ballot
voting, protection contracts, and protection of migrant workers.
• The NAALC promotes the effective enforcement of domestic labor laws in all three
countries and highlights cooperation on labor matters in three key areas: industrial
relations, occupational health and safety, and employment standards.
• In addition, NAFTA has promoted higher wages. In Mexico, for example, export firms
employ one in five workers; these workers are paid 40% more on average than those
in non-export jobs. Firms with foreign direct investment employ nearly 20% of the
labor force and pay 26% more than the domestic average manufacturing wage.
• For more information, please visit the website of the Commission for Labor
Cooperation (CLC).

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• Myth 4: NAFTA undermines national sovereignty and independence.
• Reality: NAFTA is a trilateral agreement designed to facilitate trade and investment
between Canada, the United States, and Mexico. It respects the unique cultural and legal
framework of each of the three countries and allows them to maintain their sovereignty
and independence.
• Myth 5: NAFTA does nothing to help the environment.
• Reality: The NAFTA partners negotiated a parallel agreement on environmental
cooperation, the North American Agreement on Environmental Cooperation (NAAEC). The
NAAEC commits the NAFTA partners to work cooperatively to better understand and
improve the protection of their environment. The agreement also requires that each
NAFTA partner effectively enforce its environmental laws.
• The Commission for Environmental Cooperation, established under the NAAEC, has
produced concrete improvements in the management of North American environmental
issues. With a budget of US$9 million annually, some initiatives of the Commission include
the:
• development of North American management practices for toxic chemicals;
• establishment of the first Mexican national air emissions inventory;
• launch of the North American Bird Conservation Initiative, which provides a resource for
bird conservation programs in the three countries;
• promotion of best practices to address the linkages between the environment, the
economy, and trade.
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• Additionally, the United States and Mexico created two binational
institutions. The Border Environment Cooperation Commission
provides technical support for the development of environmental
infrastructure projects in the U.S.-Mexico border region (
www.cocef.org).
• The North American Development Bank finances these projects (
www.nadbank.org). To date, they have provided nearly US$1 billion for
135 environmental infrastructure projects with a total estimated cost
of US$2.89 billion and allocated US$33.5 million in assistance and
US$21.6 million in grants for over 450 other border environmental
projects.
• The Mexican government has also made substantial new investments
in environmental protection, increasing the federal budget for the
environmental sector by 81% between 2003 and 2008.
• For more information on what has been accomplished by the parties
under the NAAEC, please visit the Commission for Environmental
Cooperation website at www.cec.org/.
.......JKCHANDEL@KUK.AC.IN
• Myth 6: NAFTA hurts the agricultural sector.
• Reality: NAFTA has led to increasingly integrated agricultural and agri-
food trade within the North American market. Since 1993, agricultural
and agri-food trade and investment flows between the NAFTA partners
has grown, with overall agricultural trade reaching about US$50 billion.
• The NAFTA partners are one another’s largest agricultural export markets:
Canada and Mexico are the two largest agricultural suppliers to the
United States, and the United States is the leading agricultural provider to
both the Canadian and Mexican markets. U.S.-Mexico agricultural trade
reached US$26.9 billion in 2008.
• As NAFTA has contributed to further integration of the trading partners’
agricultural sectors, Mexican industries have required more U.S.
agricultural inputs. For example, U.S. feedstuffs have increased Mexican
meat production and consumption; likewise the importance of Mexican
produce to U.S. fruit and vegetable consumption is growing. Grains,
oilseeds, meat and related products make up three -fourths of U.S.
agricultural exports to Mexico, while beer, vegetables and fruit account
for three-fourths of U.S agricultural imports from Mexico.
.......JKCHANDEL@KUK.AC.IN
• Myth 7: NAFTA negatively impacts the North American manufacturing base.
• Reality: Since NAFTA came into effect, North American manufacturers have
enjoyed better access to materials, technologies, capital, and talent available
across the continent. Thousands of manufacturers have capitalized on this to
improve efficiency and better refine technology, making them more
competitive at home and around the world.
• U.S. manufacturing output rose by 62% between 1993 and 2008, compared
with 42% between 1980 and 1993. In 2008,U.S. manufacturing exports reached
an all-time high of US$1.0 trillion.
• Canadian manufacturing output (real GDP) increased by 62% between 1993
and 2008 compared with 23% between 1981 and 1993. Over the same period
(1993-2008), Canadian manufacturing exports grew at a much faster pace (up
103.6%).
• NAFTA has empowered Mexico’s industrial base by facilitating modernization.
As a strategic manufacturing center in North America, Mexico enhances the
region’s competitive status in the global marketplace. Since NAFTA’s
implementation, Mexico’s international presence has been invigorated by the
growth of manufacturing output, which has since tripled. In addition, Mexico’s
manufactured exports have multiplied five times over the past 15 years.
.......JKCHANDEL@KUK.AC.IN
Finally
• The North American Free Trade Agreement (NAFTA) revolutionized
trade and investment in North America, helping to unlock our region’s
economic potential. Since it came into effect 15 years ago, North
Americans have enjoyed an overall extended period of strong
economic growth and rising prosperity.
• NAFTA has helped to stimulate economic growth and create higher-
paying jobs across North America. It has also paved the way for greater
market competition and enhanced choice and purchasing power for
North American consumers, families, farmers, and businesses.
• Furthermore, NAFTA has provided North American businesses with
better access to materials, technologies, investment capital, and talent
available across North America. This has helped make our businesses
more competitive, both within North America and around the world.
With rapidly growing economies in Asia and South America challenging
North America’s competitiveness, NAFTA remains key to sustained
growth and prosperity in the region.
.......JKCHANDEL@KUK.AC.IN
NAFTA has proven that trade liberalization plays an important
role in promoting transparency, economic growth, and legal
certainty. In the face of increased global competition, Canada,
the United States, and Mexico will work to strengthen the
competitiveness of the North American region by continuing
to pursue trade within the NAFTA region.
The three countries will also continue to expand trade with
other regions. Additionally, Canada, Mexico, and the United
States share common challenges within North America that
directly affect quality of life.
`At the 2009 North American Leaders’ Summit, our three
countries agreed to “reiterate our commitment to
reinvigorate our trading relationship and to ensure that the
benefits of our economic relationship are widely shared and
sustainable.
.......JKCHANDEL@KUK.AC.IN
• Since NAFTA came into effect, merchandise trade among the NAFTA
partners has more than tripled, reaching US$946.1 billion in 2008. Over
that period, Canada-U.S. trade has nearly tripled, while trade between
Mexico and the U.S. has more than quadrupled. [C$ figure = $1.0 trillion] 
• Today, the NAFTA partners exchange about US$2.6 billion in merchandise
on a daily basis with each other. That’s about US$108 million per hour.
[C$ figures = $2.8 billion and $115 million] 
• Since NAFTA came into effect, the North American economy has more
than doubled in size. The combined gross domestic product (GDP) for
Canada, the United States, and Mexico surpassed US$17 trillion in 2008,
up from US$7.6 trillion in 1993. [C$ figures = $18.2 trillion and $9.8
trillion] 
• In 2008, Canada and the United States’ inward foreign direct investment
stocks from NAFTA partner countries reached US$469.8 billion.
Meanwhile, Mexico has become one of the largest recipients of foreign
direct investment among emerging markets, and received US$156 billion
from its NAFTA partners between 1993 and 2008.

.......JKCHANDEL@KUK.AC.IN
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.......JKCHANDEL@KUK.AC.IN