Canada is a center of global trade. In addition to the well-known North American Free Trade Agreement (NAFTA), Canada has entered into, negotiated or announced its intention to negotiate free trade agreements with numerous other countries and regions. Specifically, in addition to NAFTA, Canada has free trade agreements with 11 countries as of 2013: Chile, Colombia, Costa Rica, Iceland, Israel, Jordan, Liechtenstein, Norway, Panama, Peru and Switzerland. In 2012 Canada joined the Trans-Pacific Partnership free trade negotiations. Trade negotiations were completed with Honduras and were well under way for the ambitious Comprehensive Economic and Trade Agreement with countries of the European Union. Finally, announcements and consultations were made with respect to other high profile countries like India, Japan, South Korea and Thailand.

Although this article focuses on NAFTA, many trade arrangements are structured on a NAFTA-based model. Thus, understanding the basics of NAFTA will permit readers to delve more deeply into the workings of other agreements as well.

On 1 January 1994, Canada, Mexico and the United States joined to form the world’s largest free trade area. Today, NAFTA is credited by some with tripling trade within the North American region. The framework for NAFTA was in place prior to negotiations. Its predecessor—the 1989 Canada-U.S. Free Trade Agreement—brought together two natural business partners and free-market proponents. A special challenge for the NAFTA negotiators was arriving at a mutually advantageous agreement while addressing Mexico’s developing economy, unique political and social conditions and infrastructure. The resulting document is a broad-ranging agreement reducing tariffs and other barriers to the movement of goods, easing the temporary movement of business people, securing foreign investment and ensuring the protection of intellectual property.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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