NAFTA at 20

DOI: 10.20542/0131-2227-2015-7-41-52

E. Komkova, Institute for the USA and Canada Studies, Russian Academy of Sciences, 2/3, Khlebnyi Per., Moscow, 123995, Russian Federation (

Abstract. 2014 marked the 20th anniversary of the entry into force of the North American Free Trade Agreement (NAFTA), which created the world’s largest free trade area. Now it links 470 million people producing more than 19 trillion USD worth of goods and services. The article addresses five issues: the international importance of NAFTA; the economic transformation that has occurred in the USA, Canada and Mexico since the advent of the NAFTA; a “thought experiment” on what American, Canadian and Mexican performance might have been without the NAFTA; the detrimental effect of 9/11 on the North American economic integration; and what’s next? At the time of its signing, NAFTA in many ways was considered a “gold standard” in terms of international free trade agreements. For the first time ever a free trade agreement brought together both developed and developing countries. It also broadened the scope of traditional FTAs by embracing services, foreign investments and property rights, and recognized the importance of workers' and environmental rights and issues. In terms of trade and investment NAFTA has been an undisputed success. Canada ranks as the United States’ largest export market, while Mexico is its second-largest export market. Today – thanks to NAFTA – North Americans not only sell more goods to one another, they also make more things together. For every dollar of goods that Canada and Mexico export to the USA, there are 25 cents’ worth of US inputs into Canadian goods and 40 cents’ worth into Mexican ones. Regardless of the impressive economic record, NAFTA has its critics. The agreement has not underwent a major update since its inception in 1994, i.e. prior to the rise of electronic commerce and, digital services, advanced manufacturing and many other innovative features of the global economy. As far as there is no political appetite to update NAFTA directly, indirect route is a subject of wide speculation. Canada, the USA and Mexico are negotiating partners to the Trans-Pacific Partnership and any benefits conferred by the TPP that go further than NAFTA would take precedence. It is assumed that the TPP should help to modernize NAFTA commitments and upgrade the North American trade and investment.

Keywords: NAFTA, economic integration, free trade, North America, USA, Canada, Mexico

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For citation:
Komkova E. NAFTA at 20. World Eonomy and International Relations, 2015, no. 7, pp. 41-52.

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