North American Free Trade Agreement (NAFTA)

Definition

The North American Free Trade Agreement (NAFTA) is a trilateral trade agreement between the United States, Canada, and Mexico that came into effect in 1994. It aimed to eliminate most tariffs and trade barriers between the three countries, facilitating the free flow of goods, services, and investment across their shared borders.

5 Must Know Facts For Your Next Test

1. NAFTA was signed in 1992 and came into effect on January 1, 1994, creating the world's largest free trade area at the time.
2. The agreement aimed to promote economic growth, create jobs, and improve living standards for the citizens of the United States, Canada, and Mexico.
3. NAFTA eliminated most tariffs on goods traded between the three countries, with the remaining tariffs phased out over a 15-year period.
4. The agreement also established rules and procedures to resolve trade and investment disputes between the member countries.
5. NAFTA has been a subject of ongoing debate, with proponents arguing it has increased trade and investment, and critics claiming it has led to job losses and environmental degradation.

Review Questions

• Explain how NAFTA is considered a source of international law within the context of 13.2 Sources and Practice of International Law.
  • NAFTA is an example of an international treaty, which is recognized as a primary source of international law under 13.2 Sources and Practice of International Law. As a trilateral agreement between the United States, Canada, and Mexico, NAFTA establishes legally binding rules and obligations that govern the trade and economic relations between the three countries. The provisions of NAFTA, once ratified by the member states, become part of the international legal framework that regulates cross-border economic activities in North America.
• Describe how the practice of international law has evolved in the context of NAFTA and its impact on the economic integration of North America.
  • The implementation of NAFTA has influenced the practice of international law by promoting the principles of trade liberalization and economic integration in North America. NAFTA has established dispute resolution mechanisms, such as the NAFTA Commission and the Chapter 19 binational panel review process, which have become part of the international legal framework governing trade disputes between the member countries. Additionally, the agreement has led to the harmonization of certain laws and regulations related to trade, investment, and intellectual property, reflecting the evolving nature of international law in response to the demands of economic globalization.
• Analyze how the negotiation and implementation of NAFTA have shaped the development of international economic law and the role of non-state actors in the international legal system.
  • The negotiation and implementation of NAFTA have had a significant impact on the development of international economic law. The agreement involved extensive negotiations between the governments of the United States, Canada, and Mexico, as well as input from various non-state actors, such as industry groups, labor unions, and environmental organizations. This process has highlighted the growing influence of non-state actors in shaping the international legal framework governing trade and investment. Furthermore, the dispute resolution mechanisms established under NAFTA, which allow private parties to challenge government actions, have contributed to the evolving role of non-state actors in the international legal system. The NAFTA experience has also informed the negotiation and design of other regional trade agreements, further shaping the development of international economic law.

Related terms

Free Trade: The practice of governments allowing the import and export of goods and services between countries without the imposition of barriers such as tariffs, quotas, or trade restrictions.

Trade Liberalization: The process of reducing or eliminating trade barriers, such as tariffs and non-tariff barriers, to promote the free flow of goods and services between countries.

Rules of Origin: The criteria used to determine the national source of a product, which is important for implementing measures such as tariffs, quotas, and preferential trade agreements.