The North American Free Trade Agreement (NAFTA) was signed by Canada,Mexico,and the United States in December 1992,and came into effect on January 1st,1994.The NAFTA is precedent-setting in that it establishes a free trade area among developed and developing countries.
The agreement seeks to promote free trade in goods and services and increase investment not only by eliminating tariff protection and reducing non-tariff barriers,but also by introducing GATT plus trade and investment-related disciplines.The NAFTA builds on the bilateral Canada-U.S.Free Trade Agreement (CUSFTA) which came into effect on January,1989.Major advances in the NAFTA over the CUSFTA include the substantially expanded coverage of government procurement (to services and construction),intellectual property and investor's rights (introducing binding investor-state arbitration),as well as more stringent rules of origin.
Two side agreements signed in 1993 address cooperation on labor (NAALC) and the environment.These side agreements will allow the imposition of fines and trade sanctions to enforce national standards under certain circumstances.
