North American Free Trade Agreement (NAFTA)

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Definition of 'North American Free Trade Agreement (NAFTA)'

The North American Free Trade Agreement (NAFTA) is an agreement signed by Canada, Mexico, and the United States, creating a trilateral trade bloc in North America. The agreement came into force on January 1, 1994.

NAFTA has been controversial since its inception. Critics argue that it has led to job losses in the United States and Canada, and that it has harmed the environment. Supporters argue that NAFTA has created jobs and economic growth, and that it has helped to promote free trade.

The agreement has four main components:

* **Tariff elimination:** NAFTA eliminates tariffs on most goods traded between the three countries.
* **Investment liberalization:** NAFTA liberalizes investment rules, making it easier for investors from one country to invest in another.
* **Intellectual property protection:** NAFTA strengthens intellectual property protection, such as copyrights and patents.
* **Dispute settlement:** NAFTA establishes a mechanism for resolving disputes between the three countries.

NAFTA has had a significant impact on the economies of the three countries. Trade between the three countries has increased significantly since the agreement came into force. NAFTA has also led to increased investment in the region. However, there is debate about the extent to which NAFTA has benefited the three countries.

In the United States, NAFTA has been blamed for job losses in manufacturing and other industries. Critics argue that NAFTA has made it easier for companies to move their operations to Mexico, where labor costs are lower. However, studies have shown that NAFTA has not had a significant impact on overall employment in the United States.

In Canada, NAFTA has been credited with creating jobs and economic growth. Canada has benefited from increased trade with the United States and Mexico. However, there have also been concerns about the impact of NAFTA on Canadian manufacturing.

In Mexico, NAFTA has been a major factor in the country's economic transformation. NAFTA has helped to attract foreign investment to Mexico, and it has led to increased trade with the United States and Canada. However, there have also been concerns about the impact of NAFTA on Mexican workers. NAFTA has led to job losses in some sectors of the Mexican economy, and it has also led to an increase in inequality.

Overall, NAFTA has had a significant impact on the economies of the three countries. The agreement has led to increased trade and investment in the region, but it has also caused some disruption and economic dislocation. The debate over the impact of NAFTA is likely to continue for many years to come.

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