Trade agreements based on mutual cooperation can be the building blocks of international peace, as they have the potential to transform political landscapes and bring prosperity. The North American Free Trade Agreement (NAFTA), signed by the United States, Canada, and Mexico, is a shining example. Inaugurated on January 1, 1994, NAFTA promotes economic growth by allowing broad trade opportunities among its members.

Prior to NAFTA, the Canada-United States Free Trade Agreement had been signed in 1988. However, the desire to include Mexico in a similar agreement led to the creation of NAFTA, effectively superseding the previous bilateral agreement. This historic treaty was endorsed by U.S. President George H. W. Bush, Mexican President Carlos Salinas, and Canadian Prime Minister Brian Mulroney in 1992. For a comprehensive understanding of NAFTA's impact, refer to this in-depth study on NAFTA's Promise and Reality.

While NAFTA was being ratified, two significant shifts occurred. Jean Chretien, then Prime Minister of Canada, negotiated two supplemental agreements - the North American Agreement on Labor Cooperation and the North American Agreement on Environmental Cooperation. In the U.S., President Bill Clinton guided the treaty through Congress, leading to its final ratification.

NAFTA's primary objective was to eliminate trade barriers between the member nations, a goal accomplished by January 1, 2008. This decision dramatically influenced the economies of the participating nations, particularly in the agricultural sector. For example, between 1992 and 2007, U.S. agricultural exports to its NAFTA partners grew by 156 percent. More on this can be found on this North American Free Trade Agreement page.

Despite its achievements, NAFTA has faced various controversies since its implementation. Critics argue that the agreement has failed to meet some of its promises and has exacerbated illegal immigration into the U.S. Nonetheless, proponents argue that NAFTA has fostered unity among the allied nations and boosted their respective agricultural sectors. One of the notable disagreements involved a dispute over the U.S.'s desire to impose a 27 percent duty on Canada's softwood imports, which was ultimately resolved. For an analytical perspective on the controversies surrounding NAFTA, refer to this article on Deciphering the NAFTA.

About the Author

Written by Michael Marcin of Crest Capital. Michael oversees all operations and finance for this national equipment finance lender. He is an excellent technical writer on topics including equipment, vehicle, and software finance and associated tax implications.