North American free trade agreement (NAFTA) - Resources

This page serves as a toolkit for Canadians interested in learning more about the North American Free Trade Agreement (NAFTA) and the modernization of the Agreement.

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Factsheet: NAFTA

NAFTA’s track record is one of economic growth and middle class job creation, both here in Canada and across North America. It also paved the way for unprecedented economic integration between partners, creating a platform where companies from Canada, the U.S. and Mexico make things together rather than simply sell to each other.

Highlights

NAFTA

Canada – United States

Canada – Mexico

Background information

NAFTA came into effect on January 1, 1994, creating the largest free trade region in the world at that time, generating economic growth and helping to raise the standard of living for the people of all three member countries. By strengthening the rules and procedures governing trade and investment, NAFTA has proven to be a solid foundation for building Canada’s prosperity and has set a valuable example of the benefits of trade liberalization for the rest of the world.

Given that the Agreement is over 23 years old, there are many clarifications and technical improvements that could be made in all trade areas covered by NAFTA, such as labour, the environment, or culture, for example. NAFTA would also benefit from the inclusion of new trade areas, such as electronic commerce, that are not currently covered, to ensure the agreement is aligned with today’s economic realities. 

Under NAFTA, total trilateral merchandise trade, as measured by the total of each country’s imports from its other two NAFTA partners, reached nearly USD$ 1 trillion, representing more than a three-fold increase since 1993. Some 77.8 percent of Canada’s total merchandise exports were destined to our NAFTA partners in 2016. Total merchandise trade between Canada and the United States more than doubled since 1993, and grew nine-fold between Canada and Mexico.

Canada is the largest merchandise export market for the U.S. and one of the three largest country merchandise export markets for 48 U.S. states. In 2016, the U.S. exported nearly US$266 billion of merchandise to Canada, and for the same year, the United States was the number one destination for Canadian merchandise exports, and was Canada’s largest supplier of merchandise imports. Almost 9 million jobs in the U.S. depend on trade and investment with Canada, while 1.9 million Canadian jobs are related to Canada exports to the U.S. Canada is the main foreign supplier of energy to United States, and was the fifth largest cumulative source of foreign direct investment (FDI) into the United States.

Canada’s trade and investment relationship with Mexico has seen strong growth since the entry into force of NAFTA. Furthermore, Canada receives approximately 20,000 agricultural workers annually under the Seasonal Agricultural Workers Program, often cited as a model for international labour-mobility arrangements. Mexico’s demographic and economic prospects point toward an even greater growth in commercial exchanges.

The enhanced economic activity and production in the region have contributed to the creation of jobs for Canadians with one in six jobs in Canada related to exports. With the addition of more than 5 million net new jobs since 1993, Canada’s unemployment rate has decreased from 11.4 percent (1993) to 7.0 percent (2015).

NAFTA’s provisions ensure greater certainty and stability for investment decisions and have contributed to enhancing Canada’s attractiveness for foreign investors while providing more opportunities for Canadians to invest in NAFTA partners’ economies. Under NAFTA’s investment-friendly environment, Canada and the U.S. developed one of the world’s largest investment relationships, while the Canada-Mexico relationship increased dramatically since the Agreement entered into force.

North America is home to over 480 million people, and over one quarter of the world’s economic output. Our integration helps maximize our capabilities, making our economies more innovative and competitive, creating a North America where Canadian, American and Mexican companies do more than sell things to each other – now, our companies increasingly make things together.

NAFTA has benefited North American businesses through increased export opportunities resulting from lower tariffs, predictable rules, and reductions in technical barriers to trade. Along with increasing exports and imports, firms have become more specialized and thus more competitive, allowing for them to make things together for customers within and beyond the NAFTA region.

North American Agreement on Labour Cooperation

The North American Agreement on Labour Cooperation (NAALC) came into effect in January 1994. It is one of two parallel accords to NAFTA. The Agreement is administered by the Commission for Labour Cooperation, which consists of a Council of Ministers and a tri-national Secretariat, based in Washington D.C. Currently four provinces (Quebec, Alberta, Manitoba and Prince Edwards Island) are signatories to the NAALC through an Intergovernmental Agreement.

The Commission works in close cooperation with the National Administrative Offices (NAOs) established in each country to implement the Agreement and serve as the national point of contact. In Canada, the Office for Inter-American Labour Cooperation within the Labour Branch of Employment and Social Development Canada acts as the Canadian NAO. The Canadian NAO also provides for the submission and receipt of public communications (complaints) on labour law matters arising in the territory of another Party and serves as the official review agency in Canada.

North American Agreement on Environmental Cooperation

The second parallel accord is the North American Agreement on Environmental Cooperation (NAAEC), which established the Commission for Environmental Cooperation (CEC) in 1994. The CEC is mandated to enhance regional environmental cooperation, reduce potential trade and environmental conflicts and promote the effective enforcement of environmental law. It also facilitates cooperation and public participation in efforts to foster conservation, protection and enhancement of the North American environment. It consists of three principal components: the Council (Environment Ministers), the Joint Public Advisory Committee (JPAC) and Secretariat, headquartered in Montreal.  It has an annual budget of US$9 million, with Canada, Mexico and U.S. contributing US$3 million per year, and is governed by consensus (not majority).

For more information on the Canada-U.S. and Canada-Mexico relationship, including statistics, please visit the following:

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