North American Free Trade Agreement:

In January 1994, Canada, the United States and Mexico launched the North American Free Trade Agreement  (NAFTA) and formed  the world's largest free  trade  area. NAFTA is considered to have brought economic growth and rising standards of living  for the people of all three member countries since 1994.

This has been achieved by strengthening the rules and procedures governing trade and investment  throughout the continent. This has been brought about by formulating and  implementing the  fiee  trade agreement, which covers dimensions such as the Trade  in Goods, Rules of  Origin, Technical Barriers to Trade; Government Procurement, Investment, Services and Related Matters, Intellectual Property, and Administrative and Institutional Provisions.

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.

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 realise 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.

Under NAFTA,  countries have  been  able  also  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.

Given these, NAFTA  is often cited as a  successful example of a  regional trading bloc, which has through the effects of trade creation brought welfare gains to the participating countries.