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What is NAFTA?

What is NAFTA?

How did NAFTA affect tariff rates within North America?

In 1994, the North American Free Trade Agreement (NAFTA) came into effect, creating one of the world’s largest free trade zones and laying the foundations for strong economic growth and rising prosperity for Canada, the United States, and Mexico. Since then, NAFTA has demonstrated how free trade increases wealth and competitiveness, delivering real benefits to families, farmers, workers, manufacturers, and consumers.

The NAFTA partners have created this website to provide Canadians, Americans, and Mexicans with information about how NAFTA works and the many ways in which it has improved the lives of North Americans.

1. What is NAFTA?
The North American Free Trade Agreement (NAFTA) is a comprehensive trade agreement that sets the rules of trade and investment between Canada, the United States, and Mexico. Since the agreement entered into force on January 1, 1994, NAFTA has systematically eliminated most tariff and non-tariff barriers to free trade and investment between the three NAFTA countries.

2. How does NAFTA work?
NAFTA is a formal agreement that establishes clear rules for commercial activity between Canada, the United States, and Mexico. NAFTA is overseen by a number of institutions that ensure the proper interpretation and smooth implementation of the Agreement’s provisions. For more information about NAFTA trilateral institutions, please see About NAFTA.

3. What are the benefits of NAFTA?
Since NAFTA came into effect, trade and investment levels in North America have increased, bringing strong economic growth, job creation, and better prices and selection in consumer goods. North American businesses, consumers, families, workers, and farmers have all benefited. For more information about NAFTA’s many benefits, please see: Results: North Americans Are Better Off After 15 years of NAFTA.

4. How can I make NAFTA work for my business?
NAFTA provides North American businesses with better access to materials, technologies, investment capital, and talent available across North America. For examples of companies that are succeeding under NAFTA, please see Success Stories.

5. What are the NAFTA rules of origin?
Each NAFTA country forgoes tariffs on imported goods “originating” in the other NAFTA countries. Rules of origin enable customs officials to decide which goods qualify for this preferential tariff treatment under NAFTA. The negotiators of the Agreement sought to make the rules of origin very clear so as to provide certainty and predictability to producers, exporters, and importers. They also sought to ensure that NAFTA’s benefits are not extended to goods imported from non-NAFTA countries that have undergone only minimal processing in North America.

6. How do I obtain a NAFTA certificate of origin?
The procedures for presenting a claim to each NAFTA partner are different. To certify that goods qualify for the preferential tariff treatment under NAFTA, the exporter must complete a certificate of origin. A producer or manufacturer may also complete a certificate of origin to be used as a basis for an exporter’s certificate of origin. To make a claim for NAFTA preference, the importer must possess a certificate of origin at the time the claim is made.

7. Who is permitted temporary entry into another NAFTA country under the NAFTA rules?
Chapter 16 of NAFTA permits the temporary cross-border movement of business travelers within the NAFTA region. Four categories of travelers are eligible for temporary entry from one NAFTA country into another: business visitors, traders and investors, intra-company transferees, and professionals.

8. How did NAFTA affect tariff rates within North America?
On January 1, 2008, the last remaining tariffs were removed within North America. When implemented, NAFTA immediately lifted tariffs on the majority of goods produced by the NAFTA partners and called for the phased elimination, over 15 years, of most remaining barriers to cross-border investment and to the movement of goods and services between the three countries.

9. How can I obtain information on NAFTA Custom procedures?
Information on Customs procedures can be obtained by contacting the Customs administrations of each NAFTA country. For more information, please visit: Canada Border Services Agency, U.S. International Trade Administration, and Mexico’s Ministry of the Economy (Spanish only).

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