North American Free Trade Agreement (NAFTA)

Updated July 10, 2020 | Infoplease Staff

In three separate ceremonies in the three capitals on Dec. 17, 1992, President Bush, Mexican President Salinas, and Canadian Prime Minister Mulroney signed the historic North American Free Trade Agreement (NAFTA). The framework agreement proposed to eliminate restrictions on the flow of goods, services, and investment in North America. The House of Representatives approved NAFTA, by a vote of 234 to 200 on November 17, 1993, and the Senate voted 60 to 38 for approval on November 20. It was signed into law by President Clinton on December 8, 1993, and took effect on January 1, 1994.

Under NAFTA, the United States, Canada, and Mexico become a single, giant, integrated market of almost 400 million people with $6.5 trillion worth of goods and services annually. Mexico is the world's second largest importer of U.S. manufactured goods and the third largest importer of U.S. agricultural products.

Prior to NAFTA, Mexican tariffs averaged about 250% as compared to U.S. duties. After the pact, about half of the tariffs on trade between Mexico and the United States were eliminated, and the remaining tariffs and restrictions on service and investment (as far as it is possible) will be phased out over a 15-year period. The United States and Canada have had a free-trade agreement since 1989.

The treaty provides full protection of intellectual property rights (patents, copyrights, and trademarks) and also includes provisions covering trade rules and dispute settlement and establishes trilateral commissions to administer them. NAFTA also marks the first time in the history of U.S. trade policy that environmental concerns have been directly addressed.