North American Free Trade Agreement (NAFTA)

NAFTA @ 20 - Fast Facts

History

  • The North American Free Trade Agreement (NAFTA), signed by Prime Minister Brian Mulroney, Mexican President Carlos Salinas, and U.S. President George H.W. Bush, came into effect on January 1, 1994.
  • The NAFTA was built on the success of the Canada-U.S. Free Trade Agreement and provided a compliment to Canada’s efforts through the WTO agreements by making deeper commitments in some key areas.
  • With the signing of the NAFTA, the world's largest free trade area was formed. The Agreement has brought economic growth and rising standards of living for people in all three countries.
  • The NAFTA, being the first comprehensive trade agreement of its type, has set a valuable example of the benefits of trade liberalization for the rest of the world.
  • In the event of a dispute, the NAFTA directs the governments concerned to seek to resolve their differences amicably through the NAFTA’s Committees and Working Groups or other consultations. If no mutually acceptable solution is found, the NAFTA provides for dispute settlement procedures. One of the principle elements of the NAFTA is the establishment of a clear set of rules for dealing with the settlement of disputes. The NAFTA was the first agreement to afford cross-border investors an impartial legal tribunal to address differences.
  • Under the NAFTA, tariffs on all covered goods traded between Canada and Mexico were eliminated in 2008. Tariffs on covered goods traded between Canada and the United States became duty free on January 1, 1989, in accordance with the CUSFTA which was carried forward under NAFTA.

Prosperity

  • Since 1994, NAFTA has generated economic growth and rising standards of living for the people of all three member countries. By strengthening the rules and procedures governing trade and investment throughout the continent, NAFTA has proven to be a solid foundation for building Canada’s future prosperity.
  • NAFTA has had an overwhelmingly positive effect on the Canadian economy. It has opened up new export opportunities, acted as a stimulus to build internationally competitive businesses, and helped attract significant foreign investment.
  • By any measure the NAFTA has been a success by serving as a basis to grow both trilateral and bilateral North American relationships and the results speak for themselves. Our integration helps maximize our capabilities and make our economies more innovative and competitive. In 1993, trilateral trade within the North American region was US$289 billion. In 2012, our total trilateral merchandise trade reached nearly US$1.1 trillion – an increase of nearly 3.7 times in US dollar terms.
  • Reflecting the prosperity and development of the region, the North American economy has more than doubled in size since 1994. The combined gross domestic product (GDP) for Canada, the U.S., and Mexico was US$19.2 trillion in 2012 up from nearly US$8.0 trillion in 1993.
  • Cooperation through the NAFTA has created a North America where Canadian, American and Mexican companies do more than make and sell things to each other, now, our companies increasingly make things together. For example, over half of Canadian manufacturing exports to the U.S. are intermediate exports.

Investment

  • The NAFTA’s provisions ensure greater certainty and stability for investment decisions by guaranteeing fair, transparent and non–discriminatory treatment of investors and their investments throughout the free trade area.
  • The NAFTA has contributed to enhancing Canada’s attractiveness to foreign investors while providing more opportunities for Canadians to invest in NAFTA partners’ economies. Investment is a key pillar of economic growth. In 2012, the stock of investment in Canada from U.S. was CA$326.5 billion, while Canada has invested CA$295 billion in our NAFTA partners.
  • Canada and the U.S. have one of the world’s largest investment relationships with a bilateral investment stock totalling almost CA$616.0 billion in 2012, according to Canadian statistics.
  • The stock of Canadian direct investment in Mexico has increased dramatically since NAFTA entered into force, reaching nearly $5.6 billion in 2012, up from only $530 million in 1993.