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Edited by Jonathan Michie
Chapter 16: The North American Free Trade Agreement: Context, Structure and Performance
Jim Stanford 1 Introduction and overview The North American Free Trade Agreement (NAFTA) came into effect on 1 January 1994, creating a continental free trade zone incorporating Canada, the US and Mexico. The NAFTA was constructed on the framework of an earlier bilateral agreement between the US and Canada, implemented five years earlier on 1 January 1989. The NAFTA zone rivals the European Union in terms of total population and total GDP (see Table 16.1). However, the intensity of integration is much deeper Table 16.1 Comparing NAFTA and the EU (2009 data) NAFTA Member countries Population GDP (US$) Initial formation and membership Number of times expanded Forms of integration 3 440 million 17 trillion 1989; 2 members 1 Tariff-free internal trade; dispute settlement; investment rights; symbolic labour and environmental institutions EU 27 500 million 17 trillion 1957; 6 members 9 Tariff-free internal trade; removal of internal borders; internal labour mobility; common external tariff and foreign policy; monetary and currency union (for most members); supranational political institutions; harmonized regulatory structures; continental social and labour standards 324 The North American Free Trade Agreement 325 in Europe than in North America, and the NAFTA to date does not envision any further processes of monetary, labour market, political and institutional integration akin to the EU’s. Within NAFTA, each member nation continues to independently set its own external tariffs and trade policies (that is, the NAFTA is not a customs union); border controls remain in place between the three member countries; no form of monetary...
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