You may have heard of the North American Free Trade Agreement (NAFTA) between Canada, the United States, and Mexico. NAFTA is considered a traditional “first generation” free trade agreement (FTA) while CETA is a more sophisticated and complicated “second-generation” agreement.
Look at the table below to see how NAFTA compares to CETA:
|Came into effect||1 January 1994||21 September 2017 (provisionally)|
|Trade between partners||$1.1 trillion in 2017||$90 billion in 2017|
|Phasing out of trade barriers||Yes, over 15 years||Yes, over 7 years|
|Initial tariff elimination||26%||99%|
|Nature of agreement||Multilateral (between three countries)||Bilateral (EU treated as one entity)|
|Trade in agricultural goods||Yes, as a result of side deals between the three parties||Yes, included in the original agreement|
|Rules of origin||Favours use of domestic components (domestic content must be 62.5%)||Favours use of foreign components (domestic content must be 45%)|
|FTA beforehand?||Yes, between Canada and the United States||No|
|Labour mobility||Visas allowed for 64 professions to work in a member country for up to three years||Streamlined regulations to allow mobility of professions|
|Investment||Closed dispute settlement mechanism between member countries||Transparent dispute settlement mechanism opened to third parties|
(Source: Livingston, “Comparing CETA and NAFTA is like Comparing Apples to Oranges”)
Use this table to discuss which is better: the traditional first-generation NAFTA, or complex second-generation CETA.
Click HERE to read about how CETA’s rules on geographical indicators affected a Canadian producer.