About NAFTA
The North American Free Trade Agreement is the
trade bloc in North America, whose members are
Canada, Mexico, and the United States. Its purpose
is to remove most barriers to trade and investment
among its members. This agreement came into
effect on January 1, 1994 and as of 2007 it is the
largest trade bloc in the world in terms of combined
purchasing power parity GDP of its members.
Provisions Under NAFTA
Although NAFTA encourages trading partners to
adopt international and regional standards, the
agreement explicitly recognizes each country's right
to determine the necessary level of protection. Such
flexibility permits each country to set more stringent
standards, as long as they are scientifically based.
NAFTA also allows state and local governments to
enact standards more stringent than those adopted
at the national level, so long as these standards are
scientifically defensible and are administered in a
forthright, expeditious manner.
Export Subsidies
The three NAFTA countries work toward the
elimination of export subsidies worldwide. The United
States and Canada are allowed under the NAFTA
to provide export subsidies into the Mexican market,
under certain conditions, to counter subsidized
exports from other countries. Neither Canada nor
the United States is allowed to use direct export subsidies for agricultural products being sold to the
other, and both countries are required to consider the
export interests of the other whenever subsidizing
agricultural exports to third countries. |
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Internal Support
Under NAFTA, the parties should endeavor to move
toward domestic support policies that have minimal
trade or production distorting effects, or toward
policies exempt from domestic support reduction
commitments under the World Trade Organization.
Grade and Quality Standards
The United States and Mexico agreed that when
either country applies a measure regarding the
classification, grading, or marketing of a domestic
product destined for processing, it will provide no
less favorable treatment for like products imported for
processing.
Rules of Origin
NAFTA improves incentives for buying within the
North American region and ensures that North
American producers receive the primary benefits
of all newly established tariff preferences. Goods
not originating from the United States, Mexico,
or Canada must be significantly transformed or
processed in one of those countries before they
receive NAFTA's lower duties for shipment to one of
the two other countries.
SOURCE: USDA
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