The Canada-United States-Mexico Agreement: Economic Impact Assessment

On November 30, 2018, Canada, the United States and Mexico signed a Protocol to modernize the North American Free Trade Agreement (NAFTA). The new Agreement is known in Canada as the Canada-United States-Mexico Agreement (CUSMA, or the Agreement). 1 Subsequently, on December 10, 2019, the parties signed a Protocol of Amendment to modify certain elements of the new Agreement in the areas of state-tostate dispute settlement, labour, environment, intellectual property and rules of origin. The final CUSMA outcome preserves key elements of NAFTA, modernizes disciplines to address modern trade challenges, reduces red tape at the border, and provides enhanced predictability and stability for workers and businesses across the integrated North American market. Overall, the modernization of NAFTA marks an important milestone in Canada’s economic relationship with the United States and Mexico.

NAFTA has had a positive impact on the Canadian economy and has supported a stable, integrated and competitive North American market. The entry into force of NAFTA in 1994 created the largest free trade region in the world. By strengthening the rules and procedures governing trade and investment in North America, the agreement has proved to be a solid foundation for building Canada’s prosperity and has set a valuable example of the benefits of trade liberalization for the rest of the world. Since 1994, NAFTA has helped generate economic growth and raise the standard of living for the people of all three member countries. In particular, NAFTA has supported the development of an integrated and competitive North American market by providing manufacturers, producers, investors and consumers with a predictable and secure commercial environment.

From a trilateral perspective, NAFTA has contributed to an unprecedented increase in trade flows across North America since its implementation in 1994. Between 1993 and 2018, total merchandise trade between Canada and the United States tripled and total merchandise trade between Canada and Mexico grew almost 10-fold. Overall, total trilateral merchandise trade (the total of each country’s imports from one another) had risen to reach nearly US$1.2 trillion in 2018.

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