What is the purpose of the Canada-U.S. Free Trade Agreement?

Answer 1

What is NAFTA? NAFTA is the North American Free Trade Agreement between the U .S., Canada and Mexico. It became effective on January 1, 1994. The purpose of NAFTA was to encourage trade by eliminating tariffs on most goods originating in and traded between these countries over a fifteen-year period. What does NAFTA do? NAFTA provides preferential tariff treatment for certain products traded between these countries when strict documentation and certification procedures are met. Currently, preferential treatment means either reduced or eliminated tariff rates, depending on the product. What are the requirements? Product qualification for NAFTA preferential tariff treatments requires: Accurate Harmonized System (HS) classification with supporting documentation. Official designation of the country of origin documented with NAFTA certificates. Products can qualify through Tariff Shift, Regional Value Content (RVC) or de minimis: Tariff Shift means that a finished good undergoes a substantial transformation in one of the NAFTA countries, changing its makeup from one item into something completely different. Regional Value Content (RVC) means that an item has some foreign content but that content is at an acceptable level under NAFTA’s rule of origin for that article. de minimis applies to articles with foreign content that is less than seven percent of the overall value of the product.

Answer 2

The United States and Canada signed the Canada-U.S. Free Trade Agreement in 1989, which provided for the removal of all trade barriers--such as tariffs, quotas, and other trade restrictions--between the two countries