We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Finance

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What is the North American Free Trade Agreement?

Jessica Ellis
By
Updated: May 17, 2024
Views: 12,135
Share

The North American Free Trade Agreement, also known as NAFTA, is a major treaty governing trading laws between Canada, Mexico, and the United States. Created in 1994, the aim of the treaty was to increase free trade, leading to more profitable markets and a wider selection of goods in all three countries. Controversial from the beginning, the North American Free Trade Agreement remains a topic of considerable political and economic debate.

One major long-term goal of the North American Free Trade Agreement was the elimination of tariffs on imported goods between the three countries. According to the basic philosophy behind the agreement, the removal of tariffs would allow goods to be imported and exported at a lower cost, making a wider range of goods available across each of the three markets. Not all tariffs were eliminated immediately by the North American Free Trade Agreement; on some goods, a ten to fifteen year phase out of tariff charges was permitted instead.

The North American Free Trade Agreement was not the first document aimed at increasing trade between North American countries. In the 1980s, the United States and Canada reached a similar agreement regarding import and export laws between the two countries. NAFTA was created following negotiations between the US and Mexico for a similar trade agreement; in order to protect their interests, Canada demanded to be involved in these negotiations, creating the need for the three-country pact.

Various controversies surround NAFTA and its impact on each of the countries. In Canada, critics argue that certain clauses in the agreement pose a possible danger to Canadian environment, particularly in regards to the sale of water sources to the United States. Some experts say that the Mexican farming system has been devastated by the North American Free Trade Agreement, as US farming subsidies and higher wages drive Mexican farmers into the US to look for work.

Possibly the greatest criticism regarding NAFTA is the issue of outsourcing. The US and Canada have a number of laws and regulations that ensure safety standards and fair wages. Mexico has fewer laws in these areas, making it profitable for American companies to move their business to Mexico, where land and workers are far less expensive. Unions and environmental groups are often among the most persistent in calling for revisions to or removal of NAFTA, as many believe it can lead to falling product quality and safety, as well as loss of jobs to American and Canadian workers.

Although NAFTA is rarely deemed a cohesive success, some experts believe that it is a living document that can be modified and improved with amendments and revisions. Since its official creation in 1994, the North American Free Trade Agreement has undergone two series of revisions, suggesting that the policy will continue to be malleable over time. Whether beloved or despised, many economists agree that the North American Free Trade Agreement is one of the most important and influential trade agreements ever created.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Jessica Ellis
By Jessica Ellis
With a B.A. in theater from UCLA and a graduate degree in screenwriting from the American Film Institute, Jessica Ellis brings a unique perspective to her work as a writer for WiseGeek. While passionate about drama and film, Jessica enjoys learning and writing about a wide range of topics, creating content that is both informative and engaging for readers.

Editors' Picks

Discussion Comments
Jessica Ellis
Jessica Ellis
With a B.A. in theater from UCLA and a graduate degree in screenwriting from the American Film Institute, Jessica Ellis...
Learn more
Share
https://www.wisegeek.net/what-is-the-north-american-free-trade-agreement.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.