What is the purpose of NAFTA?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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NAFTA is the acronym for the North American Free Trade Agreement.  The purpose of this agreement is to increase trade between Mexico, the United States, and Canada and, thereby, to improve the economies of all three countries.

A free trade agreement is one in which nations agree to reduce or eliminate barriers that restrict trade between them.  These can be barriers like tariffs or quotas.  NAFTA eliminated most of the tariffs between the various countries either immediately or eventually. 

The purpose of reducing these trade barriers was to improve the economies of all countries involved.  Mainstream economists believe that free trade is good for all countries that trade.  They believe that free trade allows countries to export the things that they make most efficiently.  Each country can concentrate its resources on the things it makes most efficiently and can import things that it does not make efficiently.  If every country makes only the things that it does efficiently, the total production of all goods will increase.  All the countries involved in the free trade can share the larger pool of products through trade.  In that way, trade makes all of the countries involved richer.

The true purpose of NAFTA, then, was to reduce trade barriers, thus increasing trade between the  North American countries and improving their economies.

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