The North American Free Trade
Agreement
The NAFTA dates from 1994 and is an extension of the 1989 Canada–U.S.
Free Trade Agreement (FTA). It established a free trade area, as opposed
to a customs union; each member country retains its own external trade
policy, and rules of origin are needed to determine when a good is made
within North America and thus allowed to move freely among the
members.
National Treatment
The fundamental principle that guides NAFTA is that of national
treatment. The principle of national treatment is that individual countries
are free to establish any laws they want, with the sole proviso that these
laws must not discriminate on the basis of nationality. For example,
Canada can choose to have stringent laws against releasing pollutants in
waterways or against the emission of noxious gases into the atmosphere.
The principle of national treatment requires that the Canadian
government enforce these laws equally on all firms located in Canada,
independent of their ownership or nationality. It is against NAFTA
conditions to apply more stringent laws to foreign-owned firms than to
domestic firms, or vice versa. Canada can also choose to impose strict
product standards related to the chemical content of paint or the
nutritional content of foods, but again the NAFTA condition requires that