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The North American Free Trade Agreement, commonly
referred to as N.A.F.T.A., is a trilateral accord between
the United States, Canada, and Mexico, inaugurated on January
1st, 1994. The agreement's priority is to eliminate barriers
to trade and investment in the "free-trade area"
(which these three countries comprise). Along with this, the
N.A.F.T.A. espouses "conditions of fair competition"
between its three participant nations, and provides protection
and enforcement of intellectual property rights. The overall
framework of cooperation, which the N.A.F.T.A. promotes, promises
to enhance the benefits which each country has to gain from
the accord.
Under the NAFTA, all non-tariff barriers to
agricultural trade between the United States and Mexico were
eliminated. In addition, many tariffs were eliminated immediately,
with others being phased out over periods of 5 to 15 years.
All agricultural provisions will be implemented by the year
2008. For import-sensitive industries, long transition periods
and special safeguards will allow for an orderly adjustment
to free trade with Mexico.
The Agreement is based on the fundamental principles
of national treatment, most-favoured-nation (MFN) treatment,
and transparency; a commitment to facilitate the cross-border
movement of goods and services; a commitment to provide adequate
and effective protection and enforcement of intellectual property
rights; a statement calling for effective domestic procedures
for the implementation and application of the Agreement; and
a rule of interpretation requiring the Parties to apply the
Agreement in the light of its objectives and in accordance
with international law.
The agricultural provisions of the U.S.-Canada
Free Trade Agreement, in effect since 1989, were incorporated
into the NAFTA. Under these provisions, all tariffs affecting
agricultural trade between the United States and Canada, with
a few exceptions for items covered by tariff-rate quotas,
will be removed by January 1, 1998. Canada and Mexico are,
respectively, the third and fourth largest export markets
for U.S. agricultural products, following only Japan and the
European Union (EU). Exports to the two markets combined are
greater than exports to the 15-member EU. In fiscal year 1996
(October-September), nearly one out of every five dollars
earned through U.S. agricultural exports was earned in North
America.
NAFTA improves incentives for buying within
the North American region and ensures that North American
producers receive the primary benefits of all newly established
tariff preferences. Goods not originating from the United
States, Mexico, or Canada must be significantly transformed
or processed in that country before they receive NAFTA's lower
duties for shipment to one of the two other countries. The
NAFTA rules of origin for agricultural products were constructed
to prevent Mexico from becoming an export platform for processed
products made from subsidized raw materials originating in
non-NAFTA countries. There are also particularly strong rules
of origin for U.S. import-sensitive commodities, such as citrus
and dairy products.
The signatories, each of which is a member of
the General Agreement on Tariffs and Trade ("GATT"),
agree that the NAFTA provisions shall prevail in the event
of conflict with their prior obligations to each other under
the GATT. They otherwise confirm that GATT continues to apply
to govern trade between the NAFTA Parties. Thus, the basic
national treatment obligation of the GATT have been incorporated
into the NAFTA. This means that once goods have been imported
into any member country, they will not be subject to discrimination.
Such an obligation is an essential part of any Agreement eliminating
trade barriers since it prevents their replacement by internal
measures favouring domestic goods over imports. The NAFTA
clarifies the manner in which the GATT's national treatment
obligation applies to measures adopted by provinces or states
(Article 301). With respect to measures of a state or provincial
government, national treatment means treatment no less favourable
than the most favourable treatment the state or province accords
to the service providers of the country of which it forms
a part.
NAFTA also contains special agricultural safeguard
provisions to provide relief against import surges. These
provisions allow only a specified quantity of a selected product
to enter at low or preferential NAFTA duty rates. Higher tariffs
are automatically triggered when imports reach a specified
level. The United States applies this special safeguard on
imports of onions, tomatoes, eggplants, chili peppers, squash,
and watermelons. Mexico, in turn, applies this special safeguard
on three groups of products -- live swine and most pork products,
apples, and potato products.
The NAFTA provides for the establishment of
a trilateral advisory committee to provide recommendations
to the three governments for resolving private commercial
disputes that arise in connection with transactions in agricultural
products. The intent is to achieve prompt and effective resolution
of commercial disputes, with special attention to perishable
items. The Committee is composed primarily of private sector
representatives but also has government participants. The
Committee met for the first time in February 1997 and is developing
recommendations to present to the three NAFTA governments.
The NAFTA permits any country or group of countries
to seek to join it, on such terms and conditions as may be
agreed with the Free Trade Commission and following the necessary
domestic approval procedures in each country. Any country
may declare that the Agreement will not apply as between that
country and any acceding country or group of countries. The
Agreement provides that the Commission will establish the
terms and conditions for acceptance of any applicant. The
Commission works by consensus.
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Sources:
http://www.nafta.net/
http://www.i-trade.com/dir07/book/ch1_2.html
http://www.sice.oas.org/summary/nafta/nafta22.stm
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