Meaning of NAFTA (North American Free Trade Agreement)

What is NAFTA (North American Free Trade Agreement):

NAFTA is the acronym for the North American Free Trade Agreement. It refers to the North American free trade zone agreed by the governments of Mexico, Canada and the United States.

NAFTA is an agreement that establishes the rules that govern commercial activity between the signatory countries of the treaty, which includes both investments and the purchase and sale of goods and services. Thanks to this agreement, these three countries would benefit from economic exchanges at a reduced cost.

Since its entry into force in 1994, NAFTA has gradually removed restrictions on trade and investment between the three countries that signed the agreement.

In fact, NAFTA contemplates in its rules how and when tariff barriers will be eliminated until the free movement of products and services between the three nations is achieved.

See also Free trade.

In this way, it establishes the creation of a set of specific institutions to monitor and guarantee compliance with NAFTA and its convenient interpretation and implementation.

The antecedent of NAFTA is the Free Trade Agreement between Canada and the United States, which was signed in 1988, and which would later be redesigned to include Mexico.

The current NAFTA was signed by the three countries on December 17, 1992, although it did not enter into force until January 1, 1994.

The treaty has been controversial since its inception. For some, it has only benefited the United States, which has taken advantage of the low cost of labor in Mexico, has wiped out much of the industry, especially agriculture, and increased the level of extreme poverty in its neighbor to the south. .

For others, the treaty has had positive consequences for Mexico. It allowed it to face, for example, stiff competition from Japan and the European Union to enter the US market.

Similarly, in the United States it is also criticized that many assemblers have installed their factories in Mexico, due to the low cost of production, causing unemployment among the American population.

This treaty is also known in English as NAFTA, acronym for North American Free Trade Agreement, and in French as ALÉNA, which would mean Accord de libre-échange nord-americain.

NAFTA Goals

  • Facilitate the circulation of goods and services in the region by eliminating barriers to trade.
  • Promote conditions of fair competition in the free trade zone.
  • Increase trade and investment in the region.
  • Protect intellectual property rights.
  • Create effective procedures for the implementation of NAFTA, for its administration and for the resolution of conflicts.
  • Establish the guidelines for subsequent improvements, extensions or renegotiations of the terms of the treaty.
  • Reduce the vulnerability of exports, especially to unilateral and discretionary measures.
  • Strengthen the national industry by developing a strong and competitive export sector.
  • Help job creation.
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