Complemented by the North American Agreement for Environmental Co-operation and the North American Agreement on Labor Co-operation, NAFTA is more comprehensive in its scope, which makes it different from other Free Trade Agreements worldwide. By enabling both Mexico and Canada to increase their exports to the United States, it has eliminated barriers to North American trading and promoted its further development. Thus, nearly half the production of Canadian manufacturers is now sent to the United States, while the Mexico's share on the US import market has doubled from 7% in 1993 to 11.7% in 2002.
By operating in more efficient and integrated economy, manufacturers of all three countries are provided with a better opportunity to realize their full potential in the North American trading area. As of 2002, Canada ranked with the most important destinations for merchandise exports from 40 out of the 50 US states. Following a tariff reduction between Mexico and Canada which took effect in January 2003, all trade within the NAFTA region has flowed tariff free.
The economic integration promoted by the North America Free Trade Agreement has promoted better environmental performance across the region. Thus, through the North American Agreement on Labor Co-operation the United States and Mexico work together for protection and enhancing basic rights of the workers, while through the North American Agreement on Environmental Co-operation three member states promote effective enforcement of environmental laws.
As of 2005, Mexico and Canada were the largest North American trading partners of the United States, with the US exports to these two markets recognized as greater as compared to exports to the six largest markets. During the period of 1992-2005, the value of US agricultural exports in the world totaled 46%, while US food and farm exports to the two North American trading partners grew by 128%.
Under the North American Free Trade Agreement, all non-tariff procedures affecting trade between Mexico and the United States were eliminated and converted to ordinary tariffs or tariff-rate quotas in January 1994. All agricultural tariffs between the United States and Mexico were either immediately eliminated or phased out over the transition periods of 5, 10, or 15 years. In fact, over half the value of agricultural trade within free trade area of the America became duty-free when the Agreement came into effect. It should be mentioned that tariff reductions between Canada and the United States were implemented under the CFTA.
In addition to the transition period of up to fifteen years for some products, the North American Free Trade Agreement utilized safeguards for protection of import-sensitive crops. Thus, the Agreement liberalized trade with Mexico in a wide range of products, including those protected by the TRQ. The duty free quota grew at 3% annual rate over the transition period of NAFTA, while over-quota tariff was gradually phased out.
The phase-out period was ten years for sugar containing products, cotton and dairy products, and fifteen years for peanuts. Some NAFTA agreements also contain provisions for frozen concentrated orange juice and sugar.