North American Free Trade Agreement

The North American Free Trade Agreement (NAFTA; Spanish: Tratado de Libre Comercio de América del Norte, TLCAN; French: Accord de libre-échange nord-américain, ALÉNA) is an agreement signed by Canada, Mexico, and the United States, creating a trilateral rules-based trade bloc in North America. The agreement came into force on January 1, 1994. It superseded the Canada–United States Free Trade Agreement between the U.S. and Canada.

NAFTA has two supplements: the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC).

Negotiation and U.S. ratification

Following diplomatic negotiations dating back to 1990 among the three nations, U.S. President George H. W. Bush, Canadian Prime Minister Brian Mulroney and Mexican President Carlos Salinas, each responsible for spearheading and promoting the agreement, ceremonially signed the agreement in their respective capitals on December 17, 1992. The signed agreement then needed to be ratified by each nation's legislative or parliamentary branch.

North America

North America is a continent entirely within the Northern Hemisphere and almost all within the Western Hemisphere. It can also be considered a northern subcontinent of the Americas. It is bordered to the north by the Arctic Ocean, to the east by the Atlantic Ocean, to the west and south by the Pacific Ocean, and to the southeast by South America and the Caribbean Sea.

North America covers an area of about 24,709,000 square kilometers (9,540,000 square miles), about 16.5% of the earth's land area and about 4.8% of its total surface. North America is the third largest continent by area, following Asia and Africa, and the fourth by population after Asia, Africa, and Europe.

In 2013, its population was estimated at nearly 565 million people in 23 independent states, or about 7.5% of the world's population, if nearby islands (most notably the Caribbean) are included.

North America was reached by its first human populations during the last glacial period, via crossing the Bering land bridge. The so-called Paleo-Indian period is taken to have lasted until about 10,000 years ago (the beginning of the Archaic or Meso-Indian period). The Classic stage spans roughly the 6th to 13th centuries. The Pre-Columbian era ended with the arrival of European settlers during the Age of Discovery and the Early Modern period. Present-day cultural and ethnic patterns reflect different kind of interactions between European colonists, indigenous peoples, African slaves and their descendants. European influences are strongest in the northern parts of the continent while indigenous and African influences are relatively stronger in the south. Because of the history of colonialism, most North Americans speak English, Spanish or French and societies and states commonly reflect Western traditions.

Free trade area

A free-trade area is the region encompassing a trade bloc whose member countries have signed a free trade agreement (FTA). Such agreements involve cooperation between at least two countries to reduce trade barriers—import quotas and tariffs— and to increase trade of goods and services with each other. If people are also free to move between the countries, in addition to FTA, it would also be considered an open border. It can be considered the second stage of economic integration.

Description

Unlike a customs union (the third stage of economic integration), members of a free-trade area do not have a common external tariff, which means they have different quotas and customs, as well as other policies with respect to non-members. To avoid tariff evasion (through re-exportation) the countries use the system of certification of origin most commonly called rules of origin, where there is a requirement for the minimum extent of local material inputs and local transformations adding value to the goods. Only goods that meet these minimum requirements are entitled to the special treatment envisioned by the free trade area provisions.

Free trade

Free trade is a policy followed by some international markets in which countries' governments do not restrict imports from, or exports to, other countries. Free trade is exemplified by the European Economic Area and the North American Free Trade Agreement, which have established open markets. Most nations are today members of the World Trade Organization (WTO) multilateral trade agreements. However, most governments still impose some protectionist policies that are intended to support local employment, such as applying tariffs to imports or subsidies to exports. Governments may also restrict free trade to limit exports of natural resources. Other barriers that may hinder trade include import quotas, taxes, and non-tariff barriers, such as regulatory legislation.

Features of free trade

Free trade policies generally promote the following features: