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The North American Free Trade Agreement was passed in November 1993. Its objectives are:

  • to eliminate barriers to trade in, and facilitate the cross-border movement of goods and services between the territories of the parties (Canada, the United States, Mexico);
  • to promote conditions of fair competition in the free trade area;
  • to increase substantially investment opportunities in their territories;
  • to provide adequate and effective protection and enforcement of intellectual property rights in each party's territory;
  • to create effective procedures for the implementation application of the agreement, and for its joint administration and the resolution of disputes;
  • to establish a framework for further trilateral, regional, and multilateral cooperation to expand and enhance the benefits of the agreement.
Source: Article 102, Objectives, North American Free Trade Agreement

NAFTA and Small Business

NAFTA provides the following for small businesses:

Tariff reduction

NAFTA removes Mexican tariffs on U.S. goods by the year 2009 (56 percent immediately and 98 percent by the year 2004) and Mexican customs users' fees by 1999, allowing U.S. small businesses to export to Mexico more cheaply than before.

Deregulation

NAFTA removes regulations, such as licensing requirements, that hinder small businesses trying to enter the Mexican market.

Intellectual property rights

NAFTA enacts protection for intellectual property rights. The enforcement of these rights will help small business owners who are dependent on copyrights and patients.

Customs regulations

Under NAFTA, the United States, Canada, and Mexico will all institute the same requirements for customs regulations, documentation, record keeping, and origin verification. This will make it easier and less expensive to export to Mexico and Canada.

Service industries

NAFTA will provide access to Mexico's $146 billion services market, including its financial, telecommunications, and land transport sectors. The United States is the world's leading services provider exporting $164 billion worth of services in 1991 and reducing trade barriers and modernizing the Mexican economy will accelerate Mexican consumer and business users' needs for services.

Government procurement

NAFTA preserves U.S. minority and small business government procurement preferences and creates a trilateral commission to educate small and medium-sized businesses about the government procurement process and notify them of openings in each nation's market.

Jobs

NAFTA will remove trade barriers, allowing export-dependent jobs to grow. The Institute for International Economics predicts that by 1995, 1 million U.S. workers will owe their jobs to U.S. exports to Mexico.

Latin America

U.S. firms expanding into Mexico may increase their access to Central and South America as well through Mexico's existing linkages to Latin America.

Source: The Small Business Advocate, December 1993

For more information contact Americafax, a 24-hour automated information line, at (202) 482-4464. Also, the NAFTA Implementation Line at (202) 482-0305.