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The North American Free Trade Agreement is an agreement signed by Canada, Mexico, and the United States, creating a trilateral trade bloc in North America.

The agreement came into force on January 1, 1994

The three signatories agreed to remove trade barriers between them. By eliminating tariffs, NAFTA increases investment opportunities.

That makes NAFTA the world’s largest free trade agreement.

The gross domestic product of its three members is more than $20 trillion. NAFTA is the first time two developed nations signed a trade agreement with an emerging market country.

NAFTA increased the competitiveness of the these three countries in the global marketplace.

It allows them to better compete with China and the European Union. In 2007, the EU replaced the United States as the world’s largest economy. In 2015, China replaced both.

Critics point to three main disadvantages of NAFTA.

  1. It sent many U.S. manufacturing jobs to lower-cost Mexico.
  2. Workers who kept jobs in those industries had to accept lower wages.
  3. Mexico’s workers suffered exploitation in its maquiladora programs.


President Trump said on Monday that the United States and Mexico had reached an accord to revise key portions of the North American Free Trade Agreement and would finalize it within days, suggesting he was ready to jettison Canada from the trilateral trade pact if the country did not get on board quickly.

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