Explain NAFTA, North American Free Trade Agreement.
NAFTA is the North American Free Trade Agreement, signed and entered into by the United States, Canada and Mexico which went into effect on January 1, 1994. The terms of the agreement called for the elimination of tariffs and trade barriers between the three countries. Over one half U.S. imports from Mexico were freed from tariffs as well as over one third of U.S. exports to Mexico. The effect of NAFTA has been debated by experts: some say it has increased the standard of living in Mexico, while others claim that any benefit to Mexico has been at the cost of American jobs. Unquestionably, with the combined GDP of the three members, it has created the world's largest trading block in terms of combined purchasing power GDP and the second largest in terms of nominal GDP comparison.