North American Free Trade Agreement (NAFTA)- Overview

• In 1992, the U.S., Mexico and Canada signed the NAFTA, a comprehensive trade and investment agreement. The NAFTA contains an ambitious schedule for tariff elimination and reduction of non-tariff barriers, as well as comprehensive provisions on the conduct of business in the free trade area.  Key areas include disciplines on the regulation of investment, services, intellectual property, competition and the temporary entry of business persons.  Canada - US trade was previously governed by the Canada-US Free Trade Agreement (FTA) of 1988.  The NAFTA entered into force on January 1, 1994.
• The NAFTA did not change the existing FTA phase-out of tariffs between Canada and the U.S., which provided for duty-free trade between Canada and the U.S. by January 1, 1998.  As of that date, essentially all tariffs on Canada-U.S. trade in goods originating from the free trade area were eliminated, save for some related to certain textiles, supply-managed sectors (e.g. dairy and poultry), and certain other agricultural goods. Under the NAFTA provisions, virtually all trade between the three countries has flowed tariff free since January 1, 2003.
• NAFTA's Chapter 19 Dispute Settlement provisions provide an impartial, rules-based system to resolve disputes between countries.  NAFTA's Chapter 11 also provides investors with a dispute settlement system regarding government measures on investment.  Canada has been party to a number of NAFTA panel disputes – most notably, the dispute with the US over Canada’s exports of softwood lumber.
• As a highly trade-dependent economy, British Columbia seeks secure market access for our exported goods, services and investment and NAFTA has served us reasonably well in this regard.  In the past seven years exports to NAFTA countries, particularly the U.S., have grown substantially.  Exports from the province to the U.S. grew from $14 billion in 1996 to $21 billion in 2004.
• While NAFTA has been a success story, there continue to be some problems, most notably U.S. antidumping and countervailing duty actions, such as the investigation currently facing British Columbia's softwood lumber exports. For more information, you can also visit the Ministry of Forests.
• Work is ongoing to negotiate improvements to the NAFTA, such as liberalized rules of origin for a broad range of foods and consumer and industrial products. 
   
• As part of the NAFTA deal, the three federal governments also signed labour and environmental side accords, which require each government to enforce its existing environmental and labour laws and regulations.

NAFTA-Related Links

• Canadian Government NAFTA

• NAFTA Secretariat

• US Harmonized Tariff Schedule

• Canada Customs Information and Harmonized Tariff Schedule

• NAFTA Side Accord on Environment - Commission for Environmental Cooperation (CEC)

• NAFTA Side Accord on Labor - North American Agreement on Labor Cooperation (NAALC)

last updated December 2005