Trade and Investment Agreements
North American Free Trade Agreement (NAFTA)
In 1992, the United States, Mexico and Canada signed the NAFTA, a comprehensive trade and investment agreement. The NAFTA contains an ambitious schedule for tariff elimination and reduction of non-tariff barriers, as well as comprehensive provisions on the conduct of business in the free trade area. Key areas include disciplines on the regulation of investment, services, intellectual property, competition and the temporary entry of business persons. Canada – United States trade was previously governed by the Canada-United States Free Trade Agreement (FTA) of 1988. The NAFTA entered into force on January 1, 1994.
- The NAFTA did not change the existing FTA phase-out of tariffs between Canada and the United States, which provided for duty-free trade between Canada and the United States by January 1, 1998. As of that date, essentially all tariffs on Canada-United States trade in goods originating from the free trade area were eliminated, save for some related to certain textiles, supply-managed sectors (e.g. dairy and poultry), and certain other agricultural goods. Under the NAFTA provisions, virtually all trade between the three countries has flowed tariff free since January 1, 2003.
- Canada has been party to a number of NAFTA panel disputes – most notably, the dispute with the US over Canada’s exports of softwood lumber. NAFTA's Dispute Settlement provisions are contained in Chapters 11, 19 and 20.
- Chapter 11 also provides investors with a dispute settlement system regarding government measures on investment.
- Chapter 19 establishes a mechanism to provide an alternative to judicial review by domestic courts of final determinations in antidumping and countervailing duty cases, with review by independent binational panels. In Canada, it is the Canada Border Services Agency (CBSA), which makes dumping and subsidy determinations, while the Canadian International Trade Tribunal (CITT) conducts injury inquiries as to whether or not the dumping or subsidy has caused injury or retardation (material retardation of the establishment of a domestic industry) or is threatening to cause injury to the domestic industry. It also contains provisions ensuring that the integrity of the panel process is upheld.
- Chapter 20 is applicable to all disputes regarding the interpretation or application of the NAFTA. The steps set out in Chapter 20 are intended to resolve disputes by agreement, if at all possible.
- The NAFTA has served British Columbia’s highly trade-dependent economy well since it provides secure market access for its exported goods, services and investment. Since its inception, exports to NAFTA countries, particularly the United States, have grown substantially. Exports from the province to the U.S. grew from $14 billion in 1996 to $21 billion in 2004.
- While NAFTA has been a success story, there continue to be some problems, most notably the very slow pace to achieve rulings in challenges of United States antidumping and countervailing duty actions against British Columbia's softwood lumber exports. For more information, you can also visit the Ministry of Forests.
- Work is ongoing to negotiate improvements to the NAFTA, such as liberalized rules of origin for a broad range of foods and consumer and industrial products.
- As part of the NAFTA deal, the three federal governments also signed labour and environmental side accords, requiring each government to enforce its existing environmental and labour laws and regulations.
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