In 1992, the United States, Canada, and Mexico reached an agreement to create a free-trade area with more than 360 million consumers and over $6 trillion in annual output. The so-called NAFTA accord will stimulate growth, promote investment in North America, enhance the ability of North American producers to compete, and raise the standard of living of all three countries. NAFTA will also speed technological progress and provide innovating companies with a larger market. Many economic studies show that NAFTA will lead to higher wages, lower prices, and higher economic growth.
NAFTA is an important recent example of the worldwide move to open trade among countries. NAFTA eliminates most barriers to trade among Canada, Mexico, and the United States; opens markets in banking, insurance, and telecommunications; ensures nondiscriminatory treatment for global investors; protects intellectual property rights; and provides dispute settlement mechanisms. Like any free-trade agreement, NAFTA reinforces the market-based economic reforms underway in Mexico. As the Mexican economy grows, it will provide the United States with a valuable and growing market for exports. Benefits derived from NAFTA, and lessons learned in its negotiation, will help in the twenty-first century as the global community struggles to define the relationship between trade and competition policy, a code of conduct for government support of high-technology industries, and the clarification of trade and environmental issues.
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