North American
Free Trade Agreement (NAFTA)
In 1992, the United
States, Mexico and Canada signed the NAFTA,
a comprehensive trade and investment
agreement. The NAFTA contains an ambitious
schedule for tariff elimination and
reduction of non-tariff barriers, as well as
comprehensive provisions on the conduct of
business in the free trade area. Key
areas include disciplines on the regulation
of investment, services, intellectual
property, competition and the temporary
entry of business persons. Canada –
United States trade was previously governed
by the Canada-United States Free Trade
Agreement (FTA) of 1988. The NAFTA
entered into force on January 1, 1994.
- The NAFTA did not
change the existing FTA phase-out of
tariffs between Canada and the United
States, which provided for duty-free
trade between Canada and the United
States by January 1, 1998. As of that
date, essentially all tariffs on
Canada-United States trade in goods
originating from the free trade area
were eliminated, save for some related
to certain textiles, supply-managed
sectors (e.g. dairy and poultry), and
certain other agricultural goods. Under
the NAFTA provisions, virtually all
trade between the three countries has
flowed tariff free since January 1,
2003.
- Canada has been
party to a number of NAFTA panel
disputes – most notably, the dispute
with the US over Canada’s exports of
softwood lumber. NAFTA's
Dispute Settlement provisions are
contained in Chapters 11, 19 and 20.
- Chapter 11
also provides investors with a
dispute settlement system regarding
government measures on investment.
- Chapter 19
establishes a mechanism to provide
an alternative to judicial review by
domestic courts of final
determinations in antidumping and
countervailing duty cases, with
review by independent binational
panels. In Canada, it is the Canada
Border Services Agency (CBSA), which
makes dumping and subsidy
determinations, while the Canadian
International Trade Tribunal (CITT)
conducts injury inquiries as to
whether or not the dumping or
subsidy has caused injury or
retardation (material retardation of
the establishment of a domestic
industry) or is threatening to cause
injury to the domestic industry. It
also contains provisions ensuring
that the integrity of the panel
process is upheld.
- Chapter 20 is
applicable to all disputes regarding
the interpretation or application of
the NAFTA. The steps set out in
Chapter 20 are intended to resolve
disputes by agreement, if at all
possible.
- The NAFTA has
served British Columbia’s highly
trade-dependent economy well since it
provides secure market access for its
exported goods, services and investment.
Since its inception, exports to
NAFTA countries, particularly the United
States, have grown substantially.
Exports from the province to the U.S.
grew from $14 billion in 1996 to $21
billion in 2004.
- While NAFTA has
been a success story, there continue to
be some problems, most notably the very
slow pace to achieve rulings in
challenges of United States
antidumping and countervailing
duty actions
against British Columbia's softwood
lumber exports. For more information,
you can also visit the
Ministry of Forests.
- Work is ongoing
to negotiate improvements to the NAFTA,
such as liberalized rules of origin for
a broad range of foods and consumer and
industrial products.
- As part of the
NAFTA deal, the three federal
governments also signed labour and
environmental side accords, requiring
each government to enforce its existing
environmental and labour laws and
regulations.
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