Introduction Economic integration has been achieved by Canada, Mexico and United Sates of America through international trade activities. The countries involved have made it possible by removing barriers for the movement of goods and services. The trading environment is characterized by “trade agreements, trade policies and trade barriers” (Bergstrand, 1989). “The North American Free Trade Agreement is an extension of free trade agreement that existed between the US and Canada in 1988. The United States law is considered as a congressional-executive agreement under international law” (Bergstrand, 1989). NAFTA is the world’s biggest free trade area. It has enhanced the economic growth for the citizens and improved their living standards. Furthermore, this trading block is recognized by the world as a stable foundation that enhances the prospect development of the countries involved (Arndt & Alex, 2001). There were doubts as to the effect NAFTA had on the level of employment in the United States. Due to the level of globalization achieved, the American companies would gain by moving the production units to Mexico, which has plenty of cheap labor. “This would encourage movement of capital from the United States to Mexico and Canada” (Arndt & Alex, 2001). Canada was seen to offer new market for American goods and vice versa (Arndt & Alex, 2001). Effects of economic Integration The integration has both positive and negative impacts on the environment. It has brought up reduced poverty levels in some parts of Canada and strengthened competitive capacity of the member states. There has also been a notable increase in the Gross Domestic Product of both the countries, especially after the economic crisis of 1994-1995. This activity has further given birth to a breed of elite business leaders (Arndt & Alex, 2001). Even though Canada was not severely affected by the integration, Mexican farmers felt reduction in food prices. This is attributed to cheap imports from United Sates. The workers found themselves unemployed after termination of their duties in the manufacturing industries as well as assembly lines. In addition to this NAFTA has led to the high level of inequality in Canada, United States and Mexico (Arndt & Alex 2001). Economists argue that such integration has not been able to reduce poverty substantially in Mexico and they operate on an economic roundabout. “In order to benefit from this integration, Canada has had to provide tax breaks to Americans, fewer environmental regulations and reduced social security payments” (Arndt & Alex 2001). The situation was quite tough in Mexico as the employees would not be allowed to form or join unions (Arndt & Alex 2001). NAFTA’s Influence On trade “The globalization of activities between the three countries did not lead to change of trade, except from the few industries that included textile and apparel; in this case, the laws were formulated to favor the United States firms which preferred the Mexican manufacturer to Canadians” (Bergstrand, 1989). “The World Bank report indicated that NAFTA imports were of roughly the same amount to non-NAFTA exports” (Bergstrand, 1989). On Agriculture The three nations did not negotiate on how to handle agricultural matters. They only signed separate agreements.