NAFTA

The North American Free Trade Agreement (NAFTA) created one of the world’s two largest regional trading blocs, along with the European Union (EU), when it came into effect in 1994.1 By combining a leading emerging market nation (Mexico) with two major industrialized nations (Canada and the USA), NAFTA constituted a pioneering effort at north-south integration on a regional scale. For Mexico, NAFTA represented a continuation and extension of the country’s market opening and liberalization policies, which were instituted in the late 1980s in the aftermath of the debt crisis earlier in that decade. For Canada, NAFTA built upon the previous bilateral Canada-US free trade agreement (CUSFTA) of 1989. For the USA, NAFTA was part of a strategy to open up foreign economies to US exports and investment, and to condition preferential access to the US market on other countries’ adoption of rules and procedures favourable to US investors and corporations. After more than two decades of bipartisan support for NAFTA by US presidents, however, Donald Trump (2017-present) has taken a distinctly hostile position, calling it one of ‘the worst trade deals ever’ and threatening to withdraw the USA from it unless it is renegotiated to his satisfaction.2