	Introduction

The North American Free Trade Agreement (NAFTA) has been in effect since January 1, 1994. NAFTA was signed by President George H. W. Bush on December 17, 1992, and approved by Congress on November 20, 1993. The NAFTA Implementation Act was signed into law by President William J. Clinton on December 8, 1993 ( P.L. 103-182 ). On May 18, 2017, the U.S. Trade Representative (USTR) sent the 90-day notification to Congress of its intent to begin talks with Canada and Mexico to renegotiate the NAFTA, as required by the 2015 Trade Promotion Authority (TPA) ( P.L. Some trade issues that Congress may address in regard to NAFTA, and the prospective renegotiation of the agreement, include the economic effects of withdrawing from the agreement, the impact on relations with Canada and Mexico, the demands that Canada and Mexico may bring to the negotiations, and an evaluation of how to "modernize" or renegotiate NAFTA. Another issue relates to the consequences of the U.S. withdrawal from the Trans-Pacific Partnership (TPP), a proposed free trade agreement among the United States and 11 other countries, including Canada and Mexico. Some TPP participants support moving forward on a similar agreement without the participation of the United States, which may have implications for U.S. competitiveness in certain markets. NAFTA influenced other FTAs that the United States later negotiated and also influenced multilateral negotiations. While the FTA generated significant policy debate in the United States, it was a watershed moment for Canada. At the time, it probably was the most comprehensive bilateral FTA negotiated worldwide and contained several groundbreaking provisions. However, there were certain exclusions and reservations by each country. Foreign Investment. Trade Trends and Economic Effects

Most economists contend that trade liberalization promotes overall economic growth and efficiency among trading partners, although there are short-term adjustment costs. NAFTA was unusual in global terms because it was the first time that an FTA linked two wealthy, developed countries with a low-income developing country. Proponents argued that the agreement would help generate thousands of jobs and reduce income disparity between Mexico and its northern neighbors. Opponents warned that the agreement would create huge job losses in the United States as companies moved production to Mexico to lower costs. Effect on the U.S. Economy

The overall net effect of NAFTA on the U.S. economy has been relatively small, primarily because total trade with both Mexico and Canada was equal to less than 5% of U.S. GDP at the time NAFTA went into effect. Because many, if not most, of the economic effects came as a result of U.S.-Mexico trade liberalization, it is also important to take into account that two-way trade with Mexico was equal to an even smaller percentage of GDP (1.4%) in 1994. While there have been periods of positive and negative economic growth in Mexico after the agreement was implemented, it is difficult to measure precisely how much of these economic changes was attributed to NAFTA. It also provides that the agreement shall remain in force for the other parties. Congress may wish to consider ways in which NAFTA could be modernized and renegotiated, the congressional role in the prospective renegotiation, the negotiating positions of Mexico and Canada, and the ramifications of a possible withdrawal from NAFTA. Some proponents and critics of NAFTA agree that the three countries may wish to look at what the agreement has failed to do as they look to the future of North American trade and economic relations. His Administration has also declared that Mexico may consider withdrawing from NAFTA if negotiations are not favorable to the country, although the priority for the Mexican government would be to improve the agreement rather than withdraw from it. Congress may wish to address the implications of President Trump's decision to withdraw from TPP and its consequences.
The North American Free Trade Agreement (NAFTA) entered into force on January 1, 1994. The agreement was signed by President George H. W. Bush on December 17, 1992, and approved by Congress on November 20, 1993. The NAFTA Implementation Act was signed into law by President William J. Clinton on December 8, 1993 (P.L. 103-182). The overall economic impact of NAFTA is difficult to measure since trade and investment trends are influenced by numerous other economic variables, such as economic growth, inflation, and currency fluctuations. The agreement likely accelerated and also locked in trade liberalization that was already taking place in Mexico, but many of these changes may have taken place without an agreement. Nevertheless, NAFTA is significant, because it was the most comprehensive free trade agreement (FTA) negotiated at the time and contained several groundbreaking provisions. A legacy of the agreement is that it has served as a template or model for the new generation of FTAs that the United States later negotiated, and it also served as a template for certain provisions in multilateral trade negotiations as part of the Uruguay Round.
The 115th Congress faces numerous issues related to NAFTA and international trade. On May 18, 2017, the Trump Administration sent a 90-day notification to Congress of its intent to begin talks with Canada and Mexico to renegotiate NAFTA, as required by the 2015 Trade Promotion Authority (TPA). The Administration also began consulting with Members of Congress on the scope of the negotiations. Alternatively President Trump, at times, has threatened to withdraw from the agreement without satisfactory results. Congress may wish to consider the ramifications of renegotiating or withdrawing from NAFTA and how it may affect the U.S. economy and foreign relations with Mexico and Canada. It may also wish to examine the congressional role in a possible renegotiation, as well as the negotiating positions of Canada and Mexico. Mexico has stated that, if NAFTA is reopened, it may seek to broaden negotiations to include security, counter-narcotics, and transmigration issues. Mexico has also indicated that it may choose to withdraw from the agreement if the negotiations are not favorable to the country. Congress may also wish to address issues related to the U.S. withdrawal from the proposed Trans-Pacific Partnership (TPP) free trade agreement among the United States, Canada, Mexico, and 9 other countries. Some observers contend that the withdrawal from TPP could damage U.S. competitiveness and economic leadership in the region, while others see the withdrawal as a way to prevent lower cost imports and potential job losses. Key provisions in TPP may also be addressed in "modernizing" or renegotiating NAFTA, a more than two decade-old FTA.
NAFTA was controversial when first proposed, mostly because it was the first FTA involving two wealthy, developed countries and a developing country. The political debate surrounding the agreement was divisive with proponents arguing that the agreement would help generate thousands of jobs and reduce income disparity in the region, while opponents warned that the agreement would cause huge job losses in the United States as companies moved production to Mexico to lower costs. In reality, NAFTA did not cause the huge job losses feared by the critics or the large economic gains predicted by supporters. The net overall effect of NAFTA on the U.S. economy appears to have been relatively modest, primarily because trade with Canada and Mexico accounts for a small percentage of U.S. GDP. However, there were worker and firm adjustment costs as the three countries adjusted to more open trade and investment.
The rising number of bilateral and regional trade agreements throughout the world and the rising presence of China in Latin America could have implications for U.S. trade policy with its NAFTA partners. Some proponents of open and rules-based trade contend that maintaining NAFTA or deepening economic relations with Canada and Mexico will help promote a common trade agenda with shared values and generate economic growth. Some opponents argue that the agreement has caused worker displacement, and renegotiation could cause further job losses.