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North American Free Trade Agreement (NAFTA)

  • The North American Free Trade Agreement (NAFTA) essentially improves and expands the U.S.-Canada Free Trade Agreement (CAFTA) of 1988.
  • As the new member of the North American Free Trade Agreement, Mexico agrees to implement the trade and investment liberalization accords agreed on in 1988 by the U.S. and Canada.
  • NAFTA's central objective is to eliminate import duties on all goods that originate in North America.  Duties on many goods were eliminated on NAFTA implementation in 1994.  Duties on other goods will be phased out over 5-, 10-, and 15-year periods.
  • With NAFTA, Mexico is expected to enjoy the biggest relative economic boost, a 2 to 5 percent increase in gross domestic product (GDP).  The U.S. will gain approximately 0.1 percent of GDP.  Canada is not expected to realize gains beyond the U.S.-Canada Free Trade Agreement (CAFTA).  Canada is the U.S.'s major source of wood and paper imports and is a major export market for the U.S.  U.S. forest products trade with Mexico is minor.  NAFTA is likely to generate little change in U.S.-Canada forest products trade.  However, it should generate significant increases in U.S. wood and paper exports to Mexico, as the Mexican economy improves.
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Last updated on Thursday, March 20, 2003 at 10:10 AM
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