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Government: Key Features of NAFTA

Regulatory - Trade: Customs Duties | NAFTA - Intro | Features of NAFTA

NAFTA Tariff Elimination

Under the North American Free Trade Agreement (NAFTA), tariffs on virtually all originating goods traded between Canada and Mexico were eliminated in 2008, with the exception of Canadian agricultural goods in the dairy, poultry, egg and sugar sectors (which are exempt from tariff elimination).

Tariffs on qualifying goods traded between Canada and the United States became duty free on January 1, 1998, in accordance with the Canada-United States Free Trade Agreement, which was carried forward under NAFTA for goods traded between Canada and the United States.

National Treatment

NAFTA provides for national treatment of the goods and services of the three partner nations and the prohibition of trade-distorting performance requirements. Canada, the U.S. and Mexico must treat each other’s goods, services, and investors as they treat their own. Once goods, services or investments from one country enter the other, they cannot be discriminated against on the basis of origin.

Significantly, NAFTA coverage also extends to investments made by any company incorporated in a NAFTA country, regardless of its country of origin. Because of this, foreign investors can locate in Canada with the assurance that they will have secure access to markets in the U.S. and Mexico. Moreover, NAFTA also has provisions for accession by other countries.

Other implications of NAFTA’s national treatment provisions include increased access to U.S. and Mexican government procurement opportunities for Canadian-based companies, and improved cross-border movement of business people and professionals among the signatory countries.

Secure Market Access

NAFTA ensures secure access for Canadian-based exporters to both the U.S. and Mexico. Clearer North American content rules reduce the risk of unilateral interpretations by customs officials. In cases where North American content is an issue, exporters or producers can choose between two formulas and select the one which is most beneficial.

Improved Dispute Settlement

NAFTA provides clear rules for dealing with the settlement of disputes. If disputes arise between companies and NAFTA governments, to which acceptable solutions cannot be negotiated, they may be settled through international arbitration. The dispute settlement process is transparent and enforceable, so the interests of exporters and business investors can be effectively defended.

Improved Intellectual Property Rights Protection

NAFTA includes comprehensive protection of intellectual property including patents, trademarks, copyrights and trade secrets. Enhanced protection for holders of intellectual property encourages the development and commercialization of innovative goods and services in the NAFTA nations.

For details of NAFTA, including its full text, please visit the website of Foreign Affairs and International Trade Canada.

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