NORTH AMERICAN

FREE TRADE
AGREEMENT
( NAFTA)
NAFTA
• It was a trade agreement between Canada, Mexico,
and the United States.
• It came into effect on January 1, 1994.
• NAFTA aimed to eliminate or reduce trade barriers
and promote economic cooperation between the three
North American nations.
PRIMARY GOALS OF NAFTA

1. TRADE LIBERALIZATION:
•NAFTA aimed to reduce or eliminate tariffs
on a wide range of goods and services
traded among its member countries.
2. MARKET ACCESS

•The agreement aimed to provide

businesses with greater access to the
markets of the member countries.
3. INVESTMENT PROMOTION

•NAFTA included provisions

to protect and promote cross-
border investments.
4. REGULATORY COOPERATION

•The agreement sought to enhance

cooperation and alignment of
regulations and standards among the
member countries.
5. ECONOMIC INTEGRATION

•NAFTA aimed to deepen economic ties

between economic ties between the
three nations, creating a more integrated
and interconnected North American.
BENEFITS OF NAFTA
•1. Increased Trade
NAFTA significantly boosted trade
between member countries by eliminating
or reducing tariffs on wide range of goods.
2. MARKET ACCESS

•Member countries gained

improved access to each
other’s market
.
3. COST SAVINGS
•The elimination of the tariffs and
reduction of trade barriers contributed
to cost savings for businesses engaged
in cross-border trade.
4. INVESTEMENT FLOWS
•NAFTA promoted cross-border investments
by providing protections for investors and
establishing a more predictable and secure
investment environment.
5. SUPPLY CHAIN INTEGRATION

•The agreement facilitated the

integration of supply chains
across North America.
6. ECONOMIC GROWTH

•The overall impact of NAFTA

was positive for economic
growth in the member countries.
7. COMPETITIVENESS

•Member countries experienced

enhanced competitiveness in
the global market place.
NAFTA CONTROVERSIES AND
CRITICISMS

1. JOB DISPLACEMENT
•One major criticisms was the claim that
NAFTA led to job displacement,
particularly in certain industries.
2. INCOME INEQUALITY

•NAFTA was criticized for

potentially exacerbating
income inequality.
3. ENVIRONMENTAL CONCERN

•Environmentalists expressed the

concerns about the potential negative
impact of NAFTA on the
environment .
4. AGRICULTURAL ISSUES

•The agricultural sector faced

challenges, with some farmers arguing
that the agreement disadvantaged
small-scale farmers.
5. INVESTOR-STATE DISPUTE SETTLEMENT
(ISDS)

•NAFTA’S ISDS mechanism, allowing

investors to sue governments over
perceived violations of their rights, was
controversial.
6. SOCIAL AND LABOR
STANDARDS

•Concerns were raised about

the impact of NAFTA on
labor standards.
7. ACCESS TO MEDICINE
•NAFTA faced criticism related to
intellectual property provisions,
particularly in the context of
pharmaceuticals.
8. TRADE DEFICITS

•Persistent trade deficits,

particularly the U.S. trade deficit
with Mexico, fueled criticism.
RENEGOTIATION OF NAFTA

•The renegotiation of NAFTA led to the

creation of the United States-Mexico-
Canada Agreement (USMCA), which
came into effect on July 1, 2020.
KEY ASPECTS

•1. USMCA AGREEMENT

•The renegotiation process resulted in a
new trilateral trade agreement among
the U.S., Mexico and Canada.
2. LABOR PROVISIONS
3. AUTOMOTIVE INDUSTRY RULES
4. INTELECTUAL PROPERTY AND DIGITAL TRADE
5. AGRICULTURAL ACCESS
6. SUNSET CLAUSE
7. DISPUTE RESOLUTION MECHANISM
8. ENVIRONMENT