GENERAL BACKGROUND

North American Free Trade Agreement or NAFTA was negotiated in 1991 and 1992; side agreements on labor and environmental matters wer e completed in 1993; the agreements wer e approved by the respective legislatures in late 1993; and the agreements went into force on Jan. 1, 1994. Under the agreements, trade and investment restrictions are being eliminated over a 15 year period, with most restrictions eliminated in the early years of the agreement.

NAFTA is broad in scope and incorporates a level of disciplines. In addition to gradually eliminating all tariffs on North American-made goods, NAFTA:

• eliminates or imposes strict rules on a range of non-tariff barriers, including technical barriers to trade;
• opens government purchasing regimes to firms in all three countries;
• eliminates restrictions on foreign investment and ensures non-discriminatory treatment for local companies that are owned by investors in other NAFTA countries;
• eliminates barriers that prevent services companies from operating across North American borders, including in such key sectors as financial services;
• provides rules preventing governments from using monopolies and state enterprises to restrict trade;
• facilitates border-crossing for business persons in all three countries;
• provides comprehensive rules to protect intellectual property rights; and
• provides three distinct dispute settlement mechanisms.

The NAFTA and its agreements provide a comprehensive framework of rules that seek to reduce or eliminate trade barriers while promoting worker rights and enhancing environment protection across North America .