Certified Production & Operations Manager (POM) Practice Exam

The purpose of NAFTA is to?

1. Increase tariff barriers

2. Phase out all trade and tariff barriers between the United States, Canada, and Mexico

3. Maintain current trade restrictions

4. Promote tourism among member countries

The correct answer is: Phase out all trade and tariff barriers between the United States, Canada, and Mexico

The correct answer highlights that the purpose of NAFTA, which stands for the North American Free Trade Agreement, is to phase out all trade and tariff barriers between the United States, Canada, and Mexico. This agreement, established in 1994, aimed to encourage free trade by reducing or eliminating tariffs on goods and services exchanged among the member countries. By doing so, NAFTA fostered economic integration and expanded trade among these nations, ultimately enhancing their competitiveness in the global market. The focus of the agreement was to create a more interconnected economy, allowing goods to move more freely across borders, which boosts economic growth and offers consumers a wider selection of products at lower prices. The elimination of barriers was intended to increase trade volume and benefit industries in all three countries, with the expectation that this would lead to job creation and stronger economic ties. Understanding this helps clarify that the other options do not align with the primary objective of NAFTA. Increasing tariff barriers, maintaining current trade restrictions, or simply promoting tourism do not reflect the core mission of promoting free trade and economic cooperation among member states. The agreement was fundamentally about enhancing trade relations rather than imposing limitations or focusing solely on tourism initiatives.