After diplomatic negotiations in 1990, the heads of state and government of the three nations signed the agreement on 17 December 1992 in their respective capitals.  The signed agreement had to be ratified by each country`s legislative or parliamentary department. Nevertheless, the “Most Favored Nation” (MFN) clause played an important role in nafta. Under NAFTA, all co-signed countries are granted MFN status, which means that they have to treat all parties on a single level in terms of trade. Thanks to the MFN, countries are not allowed to favour investors from non-NAFTA countries or to show greater favours towards foreign investors. In fact, they all have to be treated the same in the agreement. In a major concession to Democrats, the Trump administration has agreed to support some protective measures for a class of drugs called advanced and very expensive drug biologists. The final agreement nullifies a provision that, for ten years, provided protection for drugs from cheaper alternatives in both Canada and Mexico. Canada ratified the agreement in March and the USMCA came into force on July 1, 2020. Although NAFTA is officially dead, governments and businesses are still adapting to the new rules, especially the new labour rules. Coronavirus can also complicate implementation as manufacturers adapt to new guidelines in the midst of a global economic crisis.
NAFTA required automakers to produce 62.5 per cent of the vehicle`s content in North America in order to qualify for a zero tariff. With the new agreement, this threshold will be increased to 75 per cent over time. This should force automakers to buy fewer parts for a “Assembled in Mexico” car in Germany, Japan, South Korea or China. The pact also requires that 70 per cent of a vehicle`s steel and aluminum come from North America, with steel both melted and poured onto the continent. Create a framework for the continuation of trilateral, regional and multilateral cooperation to expand and enhance the benefits of this agreement. According to Chad Bown of the Peterson Institute for International Economics, the Trump administration`s list “is very consistent with the president`s position on trade barriers that like protectionism. This makes NAFTA less of a free trade agreement in many ways.  The considerations expressed by the U.S. representative regarding subsidized state-owned enterprises and currency manipulation are not likely to apply in Canada and Mexico, but are intended to send a message to countries outside North America.  Jeffrey Schott of the Peterson Institute for International Economics stated that it was not possible to conclude renegotiations quickly, while alleviating all concerns on the list.  He also said that it would be difficult to do something about trade deficits.
 According to the Council on Foreign Relations, “the agreement was also intended to protect intellectual property, establish dispute resolution mechanisms, and implement measures to protect labour and the environment through ancillary restrictions.” 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. Although the long-term benefits of NAFTA have been extensively discussed, the agreement has achieved very long results since its implementation in the 1990s.