Effects Of Nafta On Mexican Farmers

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Effects of NAFTA on Mexican farmers Introduction NAFTA refers to a trilateral free-trade agreement, which came into force in January 1994. It was concluded between the USA, Mexico and Canada. The main purpose of the agreement was to eliminate most tariffs on products traded between the three countries. It was decided that the tariffs would be phased out gradually. The final phase of the treaty was supposed to be introduced by January 1, 2008 (Yunez-Naude 5). As a result of the agreement, tariffs were eliminated in several industries. Agriculture was in the main focus, together with textiles and automobiles. In addition, NAFTA developed intellectual-property protection regulation, as well as dispute-resolution mechanisms and environmental…show more content…
Effects of NAFTA on Mexico and the USA The effects of NAFTA on the Mexican economy should be assessed in consideration with economic cycles in the United States and Mexico’s currency fluctuations. The country’s 1995 currency crisis had an impact on Mexico’s economic growth and real wages, same as the 2009 financial crisis. Broadly speaking, NAFTA brought economic and social benefits to the Mexican economy. However, these benefits were not equally distributed throughout sectors and country. Due to NAFTA, business cycles in the three countries became more synchronized, whereas these economies became more inter-connected. The 1995 financial crisis causes a drop in the GDP. It decreased by 6.2%. However, in the following three years it grew 5%-6% annually, with further drop to -0.2% in 2001. This decrease was associated with worsened economic conditions in the United States. When the economic situation in America improved, the Mexico’s real GDP started to grow as well. It reached 4% in 2004 and 4.9% in 2007. The 2009 global financial crisis negatively affected the country’s performance. NAFTA allowed Mexico to enhance development and get close to the US and Canada. Mexican manufacturers could adopt the US technology and became more innovative, which had a positive impact on the number and quality of jobs. Due to NAFTA, Mexico increased FDI, which would be 40% lower without the agreement (Villarreal 7). Mexico’s economic performance was strongly
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