Overview of the NAFTA

NAFTA: A Foundation for Canada’s Future Prosperity

The North American Free Trade Agreement (NAFTA) has brought economic growth and rising standards of living for the people of all three member countries since 1994. As well, by strengthening the rules and procedures governing trade and investment throughout the continent, NAFTA has proved to be a solid foundation for building Canada’s future prosperity.

NAFTA has enabled both Canada and Mexico to increase their exports to the United States: Canadian manufacturers now send more than half their production to the U.S., while Mexico’s share of the U.S. import market has almost doubled from 6.9% in pre-NAFTA 1993 to 11.6% in 2002.

Manufacturers in all three countries are better able to realize their full potential by operating in a larger, more integrated and efficient North American economy. In 2002, Canada was the most important destination for merchandise exports from 39 of the 50 U.S. states.

Following a final tariff reduction between Canada and Mexico, which took effect on January 1, 2003, virtually all trade in the NAFTA region has flowed tariff-free.

Canada is a successful trading nation: our exports account for over 40% of total gross domestic product—a higher proportion than for any other G7 country. An estimated one in four jobs in Canada is linked to our success in global markets.

NAFTA has played a significant role in that achievement. Today, 86.6% of total merchandise exports go to our NAFTA partners. And close to 2.3 million jobs have been created in Canada since 1994, representing an increase of 17.5% over pre-NAFTA employment levels.

NAFTA is clearly a key to Canada’s continued economic success. But the best is yet to come.

For Canadians, it is important that trade and investment liberalization proceed hand in hand with efforts to protect the environment and improve working conditions. Under NAFTA, our three countries have been able to introduce the highly successful approach of parallel environmental and labour cooperation agreements.

The economic integration promoted by NAFTA has spurred better environmental performance across the region. Through the North American Agreement on Environmental Cooperation, the three partners are promoting the effective enforcement of environmental laws. Through the North American Agreement on Labour Cooperation, Mexico and the United States are working together to protect, enhance and enforce basic workers’ rights.