Nafta is technically a free trade area, but with certain attributes of a customs union – in which Member States maintain the same obligations and rules with regard to third countries – and also with certain attributes of a common market that allows the free movement of factors of production (labour and capital) between Member States. For example, these attributes are the pressure on Canada and Mexico to comply with U.S. tariffs; Detailed rules of origin that require high North American content for a wide range of consumer products; liberalisation of trade in services, including financial services and capital flows in general; and to improve the international free flow of services and businessmen and many professionals. Resource-sharing agreements (particularly between Canada and the United States) also indicate a common market. During the negotiations, Canada retained the right to protect its cultural industries and sectors such as education and health. Some resources, such as water, should also be removed from the agreement. Canadians have failed to win free competition for U.S. government procurement. Canadian negotiators also emphasized the inclusion of a dispute resolution mechanism.  Traditionally, free trade negotiations have focused on the removal of tariffs and quantitative restrictions on trade in goods. But for Canadians who wanted to export or export to the United States, tariffs were not the main concern. Even before the free trade agreement, 80 per cent of Canadian shipments were duty-free and less than 10 per cent of exports faced U.S.
tariffs of more than 5 per cent. Many of them were clothing, textiles, shoes and some petrochemicals. (Some commodities continued to face tariffs so high that they were not sold in the United States at all.) From 1935 to 1980, the two nations concluded a series of bilateral trade agreements that sharply reduced tariffs in both countries.  The most important of these agreements was the 1960s automotive trade agreement (also known as the auto pact).   A key element of the agreement was the elimination of tariffs, the removal of many non-tariff barriers and one of the first trade agreements on trade in services. It also included a dispute resolution mechanism for a fair and timely resolution of trade disputes. The free trade agreement was concluded in 1988 and NAFTA extended most of the provisions of the free trade agreement to Mexico. NAFTA was negotiated by the governments of U.S. President George H.W. Bush, Canadian Prime Minister Brian Mulroney and Mexican Prime Minister Carlos Salinas de Gortari. An interim agreement on the pact was reached in August 1992 and signed by the three heads of state and government on 17 December. NAFTA was ratified by the national parliaments of the three countries in 1993 and came into force on January 1, 1994.
In May 1986, Canada and the United States began negotiations for a bilateral free trade agreement. An agreement was reached in October 1987. It became the most important theme of the Canadian election in the fall of 1988. Prime Minister Brian Mulroney`s Conservative government supported the agreement and won the election. The agreement came into force on January 1, 1989. THE TRADE AGREEMENTS EVOLUTIONA visual study of more than 800 trade agreements signed between 1947 and 2016. In March 2014, a larger free trade agreement was reached with South Korea – Canada`s first such agreement with an Asia-Pacific nation.