North American Free Trade Agreement - NAFTA

North American Free Trade Agreement - NAFTA

North America Free Trade Agreement. A controversial free trade agreement between Canada, Mexico, and the United States. Signed in 1993, it was the first free trade agreement between a developing nation (Mexico) and two developed nations. The agreement reduced or eliminated most trade restrictions between the participants. In particular, NAFTA allowed for the more or less free importation and exportation of agricultural products and textiles. Proponents of NAFTA argue that the agreement allowed for cheaper access to goods, especially food, which, in turn, increased the real incomes in all three countries. Critics contend that the agreement has not substantially reduced poverty in any of the participating countries. Mexican critics complain that NAFTA reduced profits for farmers and agricultural workers unable to compete with American agribusiness.

American organized labor groups have argued that the agreement has accelerated deindustrialization and caused job losses because it has become cheaper for American companies to move factories to Mexico and hire Mexican workers. However, NAFTA proponents note that employment in the United States increased between 1993 and 2007, and that factories in the U.S. were closing even before NAFTA was signed.

Canadian opposition to NAFTA has tended to be related to environmental concerns, particularly the lack of oversight for the enforcement of its environmental provisions. Because NAFTA allows Canadian water to be bought and sold as a commodity, some environmental groups cited concerns that this would cause the degradation of Canadian wild lands. See also: Maquiladora.