Introduction The purpose of this term paper is to describe about the North American Free Trade Agreement (NAFTA) and the impact of this agreement on the US, compare the NAFTA agreement to the European Union free trade agreement, and analyze the difference between NAFTA & EU FTA, find out the correlation and interdependence of NAFTA and the EU. The North American Free Trade Agreement From the very beginning of the 1990s, developed and developing countries all over the world tried to change autocratic political and outdated economic systems, for instance, Latin America and Eastern Europe experienced poor governance and inefficient economies; therefore, it was essential to concentrate on institutional development and cooperation among the countries to create market economies, implement quick liberalization and privatizations. Three North American countries like Canada, Mexico, and the US had signed the ‘North American Free Trade Agreement’ and it enforced in 1994 to remove most barriers to trade and investment (like all non-tariff barriers to agricultural trade between the US and Mexico eliminated) and the government of the member states had changed other legal provisions as well (Sanchez, 2006). However, Burfisher, Robinson & Thierfelder (2001, p.2) stated that the US Congress approved this agreement after extreme political debate while the opponents focused on many factors, such as, the impact of this agreement on labor markets, adverse influence of the imports from Mexico, the effect trade liberalization in Mexican agriculture, migration of unskilled workers to the US. At the same time, the supporters of this agreement stated that it has a positive influence on many issues of the US economy, for example, cheaper imports from Mexico assisted the customers, and create new export market and job opportunities (Burfisher, Robinson & Thierfelder 2001, p.2). The impact of NAFTA on the United States: Burfisher, Robinson & Thierfelder (2001, p.126) stated that NAFTA affects bilateral trade flows among the member states since it eliminates tariffs and many non-tariff barriers to trade; in addition, Luckstead, Devadoss & Rodriguez, A. (2012) pointed out that Mexicans illegally enter the US to seek better service and living standards. O’Leary, Eberts & Pittelko (2012, p.2) stated that NAFTA was contentious event in the US politics because the people of this country believed that it would not have a significant impact on the US economy though other two member states had appropriate measures in order to harmonies trade policies. However, O’Leary, Eberts & Pittelko (2012, p.12) further addressed that before 1994, the level of the US exports and imports of trade with Mexico were both under $50 billion each fiscal year, but it has increased significantly after this agreement, for example, US goods exports and imports to NAFTA in 2010 were $411.50 billion and $506.10 billion respectively. In addition, O’Leary, Eberts & Pittelko (2012, p.18) stated that easy average of Mexico’s share of the US imports boosted by 224.0% between 1989 and 2000; at the same time, US goods exports increased by 23.40% ($78.0 billion) from 2009 and more than 149.0% from 1994 and US goods imports augmented by 25.60% (