The Pros And Cons Of NAFTA

In 1992, Canada, Mexico, and the United States signed the North American Free Trade Agreement (NAFTA). NAFTA established a free-trade zone in North America and took effect on Jan. 1, 1994. The purpose of NAFTA was to immediately lift tariffs on the majority of goods produced by the signatory nations. It eliminated many trade barriers between these nations and it “encouraged the mobility of capital, production, and manufacturing throughout the region”(Hernandez, 27). Since NAFTA has been into effect, the United States “currently accounts for 88 % of Mexico’s exports and 56 % of Mexico’s imports”(Flores-Macias, 435). Also the foreign direct investment (FDI) flows to Mexico increased from an average of “3$ billion annually during the 1980’s to an average of 14$ billion since 1994”(Flores-Macias, 435). It was the plan of NAFTA’s creators who foresaw the integration and synchronization of the U.S. and Mexican economies and how these were the steps necessary to pave the
In the agricultural business, the assumption was that the massive amount of farmers in Mexico who cultivated corn would continue farming, even as less expensive corn was imported from the United States flooded into the market. It was assumed that the farmers would switch to growing fruits and vegetables — with some help from foreign investment — and then export these crops to the United States. Instead, the farmers exported themselves because the Mexican government decided to reduce tariffs on corn even faster than NAFTA required, according to Philip Martin, an agricultural economist at the University of California, Davis (Uchitelle). People understood that the transition from corn to fruits would be hard, but they did not expect almost no transition. Overall, the implementation of the North American Free Trade Agreement deepened the dependence of Mexican families upon wages earned north of the border and also created economic problems for