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North American Free Trade Agreement (NAFTA)

For ongoing coverage of NAFTA expansion, visit our blog, Eyes on Trade:
Eyes on Trade


The North American Free Trade Agreement took effect on January 1, 1994.

NAFTA opponents - including labor, environmental, consumer and religious groups - argued that NAFTA would launch a race-to-the-bottom in wages, destroy hundreds of thousands of good U.S. jobs, undermine democratic control of domestic policy-making and threaten health, environmental and food safety standards.

NAFTA promoters - including many of the world’s largest corporations - promised it would create hundreds of thousands of new high-wage U.S. jobs, raise living standards in the U.S., Mexico and Canada, improve environmental conditions and transform Mexico from a poor developing country into a booming new market for U.S. exports.

Why such divergent views? NAFTA was a radical experiment - never before had a merger of three nations with such radically different levels of development been attempted. Plus, until NAFTA, “trade” agreements only dealt with cutting tariffs and lifting quotas to set the terms of trade in goods between countries. But NAFTA contained 900 pages of one-size-fits-all rules to which each nation was required to conform all of its domestic laws - regardless of whether voters and their democratically-elected representatives had previously rejected the very same policies in Congress, state legislatures or city councils.

NAFTA requires limits on the safety and inspection of meat sold in our grocery stores; new patent rules that raised medicine prices; constraints on your local government’s ability to zone against sprawl or toxic industries; and elimination of preferences for spending your tax dollars on U.S.-made products or locally-grown food. In fact, calling NAFTA a “trade” agreement is misleading, NAFTA is really an investment agreement. Its core provisions grant foreign investors a remarkable set of new rights and privileges that promote relocation abroad of factories and jobs and the privatization and deregulation of essential services, such as water, energy and health care.

Remarkably, many of NAFTA’s most passionate boosters in Congress and among economists never read the agreement. They made their pie-in-the-sky promises of NAFTA benefits based on trade theory and ideological prejudice for anything with the term “free trade” attached to it.

Now, over a decade later, the time for conjecture and promises is over: the data are in and they clearly show the damage NAFTA has wrought for millions of people in the U.S., Mexico and Canada. Thankfully, the failed NAFTA model - a watered down version of which is also contained in the World Trade Organization (WTO) - is merely one among many options.

Throughout the world, people suffering with the consequences of this disastrous experiment are organizing to demand the better world we know is possible - but we face a race against time. The same interests who got us into NAFTA are pushing to expand it to include 31 more countries in Central and South America through the proposed Free Trade Area of the Americas (FTAA). In 2005, Congress voted to extend NAFTA to five Central American countries through the Central American Free Trade Agreement (CAFTA), and the Bush administration is now looking to add Peru and Colombia to the list as well.

Department of Labor Certified
Trade-Related Job Loss

  NAFTA Chapter 11 Investor-State Cases: Lessons for the Central American Free Trade Agreement

  Another Americas is Possible: The Impact of NAFTA on the U.S. Latino Community and Lessons for Future Trade Agreements

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