North American Free Trade Agreement

The Columbia Encyclopedia, 6th ed.

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 called for the gradual elimination of most remaining barriers to cross-border investment and to the movement of goods and services among the three countries; its provisions as a result were not fully in effect until Jan. 1, 2008. 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. The agreement was a significant issue in the U.S. elections of 1992, in which third-party presidential candidate and NAFTA opponent Ross Perot won 19% of the vote, and 2016, during and following which successful Republican presidential candidate Donald Trump called for its renegotiation or abandonment.

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