The North American Free Trade Agreement (NAFTA), effective January 1, 1994, created a trilateral trade bloc among Canada, Mexico, and the United States, aimed at reducing trade barriers and protecting intellectual property. It addressed tariffs on goods, labor rights, and environmental standards, providing benefits such as duty-free access and increased competitiveness for businesses. While NAFTA spurred trade and investment, it also led to job losses in manufacturing and increased trade deficits in the U.S.

1. NAFTA
North American Free Trade Agreement
Presentation by
Srija,Likitha,Prakash
BBA SEM 6

2. History of NAFTA
 The North American Free Trade Agreement (NAFTA) is an agreement signed by the governments
of Canada, Mexico, and the United States, creating a trilateral trade bloc in North America.
 NAFTA came into effect on January 1, 1994 and superseded the Canada – United States Free
Trade Agreement.
 This is a 3 bilateral agreement because agreement took place between
CANADA-MEXICO , MEXICO-US , US- CANADA .
 Two side agreements to NAFTA aimed to establish high common standards in workplace safety,
labor rights, and environmental protection, to prevent businesses from relocating to other
countries to exploit lower wages or looser regulations.
 NAFTA also seeks to eliminate non-tariff trade barriers and to protect the intellectual
property right of the products.
 When viewing the combined GDP of its members, as of 2010 NAFTA is the largest trade bloc in
the world. (Trade bloc: A trade bloc is a type of intergovernmental agreement, often part of a
regional intergovernmental organization, where regional barriers to trade, (tariffs and non-
tariff barriers) are reduced or eliminated among the participating states.)

3. MEMBERS OF NAFTA
 The North American Free Trade Agreement (NAFTA) is an agreement signed by the
governments of Canada, Mexico, and the United States, creating a trilateral trade bloc
in North America.

4. NAFTA and its Trading commodities
 NAFTA was created to eliminate tariff barriers to agricultural, manufacturing, and services; to
remove investment restrictions; and to protect intellectual property rights. This was to be done
while also addressing environmental and labor concerns
 Small businesses were among those that were expected to benefit the most from the lowering of
trade barriers since it would make doing business in Mexico and Canada less expensive and would
reduce the red tape needed to import or export goods.
 Before NAFTA, goods exported to Mexico attracted tariffs of 30% or higher, with US-produced
goods being charged higher tariffs than the duties imposed on Mexican goods exported to the
United States. NAFTA addressed the trade imbalance by removing some of the tariffs
immediately, with other tariffs being phased out over a duration of 15 years.
 Imports from participating countries were given the “Favored Nation” status, which banned any
states or provincial governments from imposing tariffs on such goods. The agreement ensured
duty-free access to a vast number of areas, such as construction, engineering, manufactured
goods, consulting, health care management, accounting, etc.

5.  Establishment of standards. The three NAFTA countries agreed to toughen health, safety, and
industrial standards to the highest existing standards among the three countries (which were
always U.S. or Canadian). Also, national standards could no longer be used as a barrier to free
trade. The speed of export-product inspections and certifications was also improved.
 Tariff reduction for motor vehicles and auto parts and automobile rules of origin.
 Expanded telecommunications trade.
 Reduced textile and apparel barriers.
 More free trade in agriculture. Mexican import licenses were immediately abolished, with most
additional tariffs phased out over a 10-year period.
 Expanded trade in financial services.
 Opening of insurance markets.

6.  Increased investment opportunities.
 Liberalized regulation of land transportation.
 NAFTA also included provisions that increased protection of intellectual property rights, such as
computer software and chemical production. Participating countries agreed to enforce rules that
would protect the intellectual property rights of other members and take punitive measures
against industrial theft.

7. Economic condition

9. PROS AND CONS
 Pros
 A spurred surge in cross-border trade and investment
 Increased competitiveness of U.S. industry
 Opened up opportunities for small businesses
 Implemented universal, higher health, safety, and environmental standards
 Cons
 Caused loss of manufacturing jobs, especially in certain industries
 Increased inflation in the U.S.
 Increased U.S. trade deficits
 May have spurred Mexican immigration