How well do you know NAFTA?

10 facts you might not have known about the trade agreement, including why some would like to pull the United States out of it.

By Steve Burak, Kathy Baylis and Jonathan Coppess, farmdoc daily

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The North American Free Trade Agreement (NAFTA) has been in the news since summer 2016, when presidential candidate Donald Trump vowed to renegotiate the “worst trade deal ever.” He later said he would pull the United States out of the agreement if renegotiation failed with Canada and Mexico.

Negotiations continue, but the three nations are reportedly far from reaching a new agreement. To help you follow the negotiations, here are 10 facts about the 23-year-old agreement:

1. The U.S. entered a bilateral agreement with Canada in 1988, after which President George H.W. Bush began negotiating with Mexico. By 1992, a trilateral deal that later became NAFTA had been signed by all three nations.

2. The current NAFTA agreement, which includes a pair of addendums related to labor and environmental matters attached to the 1992 deal, became official Jan. 1, 1994.

3. NAFTA eliminated most import and export tariffs over time, which has accelerated trade growth.

4. Since NAFTA’s implementation, trade among member nations has nearly quadrupled, from $293 billion to $1.1 trillion in 2016.

5. Today, Canada is the biggest export destination for U.S. goods.

Related: Chief trade negotiator bemoans lack of NAFTA progress. Click here.

6. Mexico is both the second-biggest export market for U.S. products and the second-biggest supplier of imports into the U.S. In fact, 80 percent of Mexico’s exports come to the United States.

7. Rapid growth in trade with Mexico lies at the center of much of the current NAFTA opposition. Since NAFTA began, the U.S. trade balance with Mexico has turned from a small surplus into a growing deficit.

8. NAFTA’s roots trace back to 1980, when President Ronald Reagan proposed a North American common market to make the three countries more competitive in a global market.

9. Also in the 1980s, Congress gave the president “fast-track authority” to negotiate trade agreements without direct involvement from Congress. The authority to ratify or reject agreements remains with Congress.

10. Under NAFTA, all three countries have “most favored nation” status, meaning they must give one another equal treatment, including over foreign investment. A nation cannot provide better treatment to domestic investors, nor can it offer a better deal to non-NAFTA investors.

Learn more: Click here to read about some of the United States’ objectives in renegotiating NAFTA.

This article is part of the University of Illinois Gardner Agriculture Policy Program, which focuses on policies pertinent to the upcoming farm bill, conservation, trade and other ag-related issues. The program is funded through the Leonard and Lila Gardner/Illinois Farm Bureau Family of Companies endowment.

About the authors: Jonathan Coppess and Kathy Baylis are faculty members at the University of Illinois’ Department of Agricultural and Consumer Economics (ACES). Steve Burak is an ACES graduate student.

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