North American Free Trade Agreement

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The North American Free Trade Agreement (NAFTA) is a comprehensive agreement that sets the rules for international trade and investment between Canada, the United States, and Mexico. The Agreement is a complex and lengthy document that includes eight sections, 22 chapters, and some 2,000 pages. Some of the most important provisions are highlighted below.

Market Access for Goods

• The elimination of duties on thousands of goods crossing borders within North America.
• Phased-in tariff reductions – now complete – and special rules for agricultural, automotive, and textile and apparel products.
• Important rights for NAFTA services providers and users across a broad spectrum of sectors.
• Special commitments regarding telecommunications and financial services.
• Formal dispute resolution processes that help resolve differences that arise in the interpretation or application of NAFTA’s rules.

Protection for Foreign Investment

• Commitment to treat each others’ investors and their investments in the territory of the host NAFTA country no less favorably than their own domestic investors.
• Commitment to provide NAFTA investors with the best treatment given to foreign investors from beyond North America.
• A transparent and binding dispute resolution mechanism specially designed to deal with investment.

Protection for Intellectual Property

• Adequate and effective protection and enforcement of a broad range of intellectual property rights (including through patents, trademarks, copyrights, and industrial designs), while ensuring that the measures that enforce these rights do not themselves become barriers to legitimate trade.

Easier Access for Business Travelers

• Easier access for business professionals in hundreds of different professions so that they can travel for business throughout the continent.

Access to Government Procurement

• Access to government procurement opportunities at the federal levels in Canada, Mexico, and the United States.

Rules of Origin

• NAFTA rules of origin are used to determine whether a good is eligible for preferential treatment under NAFTA.
• At various times since NAFTA came into effect, the partners have implemented measures to liberalize or expand the list of products that qualify for preferential treatment. Since 2005, for example, the NAFTA partners have implemented two sets of changes to make it easier for traders to qualify for duty-free treatment under NAFTA.

Side Agreements

The NAFTA partners also negotiated two side agreements: the North American Agreement on Environmental Cooperation and the North American Agreement on Labor Cooperation.

Commitment to the Environment

The NAFTA partners signed a parallel agreement addressing environmental issues, the North American Agreement on Environmental Cooperation (NAAEC). Under the NAAEC, the United States, Canada and Mexico have committed to take certain steps to protect the environment, including the obligation that each of the parties will not fail to effectively enforce its environmental laws. A party’s failure to meet this environmental obligation is subject to the same type of dispute resolution mechanism that is included in the NAFTA for commercial obligations. In addition, the NAAEC has created a mechanism that allows any citizen or non-governmental organization to make a submission concerning whether a party is failing to effectively enforce its environmental law. In contrast, commercial obligations are not subject to this type of independent review.

Under the NAAEC, the parties also agreed to work cooperatively to address regional environmental concerns, to help prevent potential trade and environmental conflicts, and to promote the effective enforcement of environmental law, among other things. In order to assist with the parties’ efforts to fulfill these commitments, the partners created an international institution, the Commission for Environmental Cooperation (CEC).

For more information, please visit www.cec.org.

Commitment to Labor Cooperation

The NAFTA partners signed a parallel agreement on labor cooperation designed to promote the effective enforcement of each country’s labor laws and regulations and to facilitate further cooperation between NAFTA partners on labor matters.

The North American Agreement on Labor Cooperation (NAALC) established the Commission for Labor Cooperation (CLC), consisting of a Ministerial Council and a Secretariat. In the implementation of the NAALC, the CLC is assisted by National Administrative Officers (NAOs) in each of the three countries.

• The current work program for labor cooperation focuses on occupational safety and health, employment and job training, labor law, and workers’ rights and productivity.
• For more information, please visit www.naalc.org.

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