International Business: The New Realities, 5th Edition

North American Free Trade Agreement (NAFTA)

Launched in 1994, NAFTA consists of Canada, Mexico, and the United States. It is the most significant economic bloc in the Americas and comparable to the EU in size (see www.nafta-sec-alena.org). NAFTA’s passage was smoothed by the existence, since the 1960s, of the maquiladora program under which U.S. firms located factories in northern Mexico to access low-cost labor and avoid tariffs.

What has NAFTA accomplished for its members? Initially, the accord increased market access between Canada, Mexico, and the United States. It eliminated tariffs and most nontariff barriers for products and services traded in the bloc and made it possible for member–country firms to bid for government contracts in all ...