NAFTA And The Mexican Economy

The effects of NAFTA on Mexico, U.S, and their economic situation have impacts on political interests. There was main objective of Mexico in pursuing free trade area with the United States or with other countries to stabilize the Mexican economy in sustainable way and promote economic development by attracting huge foreign direct investment means of increasing exports, in house manufacturing and creating jobs. NAFTA would improve investor confidence in Mexico has directly impact to increase export diversification, create job market increase wage rates, reduce poverty, improve standard of living, quality and economic growth

Nonetheless, many analysts agree that NAFTA has made a mark. U.S.-Mexico trade continues to grow, and NAFTA and the promises it brings have lessened the impact of the Mexican recession and quickened its recovery. Healthy, growing bilateral trade, they say, depends on healthy, growing economies, and Mexico’s recovery and continuing economic liberalization should fuel that trend.

Historically, agriculture has been the most important sector of Mexico’s economy, since plants and grains were first domesticated to today’s modern world. Today, Mexico’s main agricultural products like corn, fruits and vegetables that make up about 80% of agricultural production, which in many states is the only source of income that people have to survive day to day. Unfortunately, this livelihood has become threatened by the American subsides that create unfair competition with local Mexican farmers and small business, by offering to the Mexican market a vast supply of agricultural products along with low prices that take away jobs from millions of farmers. These unfortunate circumstances are damaging consequences

Unlike the United States 7.25/hr minimum wage, Mexico’s minimum wage is set at just few dollars per day. Careless of the American working class, large corporations closed factories in the US and moved them south of the border to Mexico where they could pay workers a minimum wage and not have to conform to regulations. Since Mexico was added, the US manufacturing sector has outsourced five million jobs (Blecker). Many of these workers did not have a backup plan or funds to support them after they lost their job therefore they fell into extreme poverty. Sadly, these workers could not provide for their families and struggled to survive. Not only did NAFTA ruin the US manufacturing job market, the trade deficit between the USA and Mexico grew exponentially and now sits at an unfathomable amount. The deficit took a turn for the worse due to NAFTA, the United states had a 1.7 billion dollar surplus in 1993 (prior to Mexico’s addition), to a 54 billion dollar deficit by 2014 (Mcbride). Clearly, the United States lost a significant amount of currency due to NAFTA. Although the US is commonly on the losing side of trade deals, NAFTA is by far the most detrimental to the

Is it true that NAFTA deal changed a lot between the countries which are made NAFTA deal? According to McMillan (2015), in the article “How NAFTA changed America (and Mexican) food forever” that she explains the changed that happened after NAFTA deal between U.S, Mexico and Canada. First, NAFTA helped the “economic integration” to be better and cheaper than before 20 years ago. Also, America exhausted a lot of fruit and vegetables, so now the trucks road between America and Mexico very crowded because the trucks did the transfer of fruit and vegetables to America. Moreover, now NAFTA deal accept to them to eat the fresh food, so USDA propose to move the food system to Mexico. Additionally, now Mexico is the biggest market for America, and U.S

One of NAFTA's greatest financial effects for the United States and Canadian exchanges has been to increase bilateral agricultural flows (NAFTA’s Economic Impact). From all three countries, Canada, from the statistics gathered, showed that it had the most economic increase because of the previous organized free trade deal that originated before NAFTA (NAFTA’s Economic Impact). Canada is the main exporter of products to the United States, furthermore, Mexican interests in Canada have tripled, and Canada has included 4.7 million new work occupations since 1993 (NAFTA’s Economic Impact). With NAFTA, Canadian organizations are turning out to be more productive and competitive prompting new jobs (when a business profits, they have enough money to bring more

Overall though, NAFTA has accomplished some goals, but has drastically failed in others (Weintraub). Even though there have been some benefits from the North American Free Trade Agreement, the loss of jobs, increase in illegal immigration, negative environmental impact, and change in the job markets in the USA and Canada have been very detrimental to the two nations, often at the expense of Mexico’s rapid industrialization. Approximately, 1,015,291 US jobs have been lost directly because of NAFTA since Mexico is a region with a lower cost of operation so the jobs market can’t compete with Mexico (Anderson and Bourassa). Since the United States has monopolized the food industry, for the most part, in North America, they have displaced around 9.3 million Mexican farmers that have either left for the city or illegally immigrated to the United States (Anderson and Bourassa). Environmental impacts have been negative in regions such as the “maquiladora zone”, which is along the Mexican-American border because of the increase in factories in the area, which has caused an increased in population and overall traffic and urban expansion, which has killed the desert environment of the region (Anderson and

In agriculture NAFTA’s goal was to establish different cross-border engagements in regard to the agriculture trade. As one engagement would be established between the U.S. and Mexico, the other would be set up between Canada and Mexico. NAFTA in regard to the trade in agriculture involving the U.S. and Mexico did away with the majority of the barriers not having nothing to do with tariffs. This was accomplished by converting them to ordinary tariffs, or by tariff-rate quotas. Tariffs placed on corn and sugar where done away with in 15 years between the two nations (Villarreal & Fergusson, 2014). One-half of the agricultural trade between the U.S., and Mexico was duty free when NAFTA was established. This was an advantage to both nations due to the fact that before NAFTA exports from the U.S to Mexico in agriculture were under the control of requirements in licensing imports that were restrictive (Villarreal & Fergusson, 2014). Next in regard to the automotive industry, NAFTA did away with the auto decree in Mexico that was so restrictive. This involved the doing away of tariffs from Mexico on products from Canada and the U.S., and importation tariffs from the U.S. on Mexico as long as they followed the stipulations involving the rules of origin. These were sixty percent in regard to parts for other

The North American Free Trade Agreement, or NAFTA, which was signed into law by President Bill Clinton on December 8th, 1993, went into effect on January 1st, 1994. By December of 1994, Mexico underwent a deep economic crisis, which saw the devaluation of the Mexican peso, a deterioration of wages, rampant unemployment, as well as extensive personal and corporate bankruptcies that led to the poverty and malnutrition of many of its citizens. As we explore the economic effects that NAFTA has had on Mexico, we must consider what economic disparity has meant for the citizens of Mexico, and how it has impacted migration patterns from Mexico to the United States.

As stated in a New York Times article: “The report said the price of Mexican corn has fallen more than 70 percent since Nafta took effect, severely reducing the incomes of the 15 million Mexicans who depend on corn for their livelihood.” Nafta is an agreement between the U.S., Canada, and Mexico. The pact’s purpose is to improve the economy and produce more “stuff” by removing tariffs on trading between the three countries. This hurts Mexican corn farmers because since there is no restriction, trade is a free and easy way to get the necessities that each place needs. Since America has the higher number of people, more advanced machines, and more efficient workers and systems, the nation is able to easily produce more than the poor corn harvesters in Mexico. The passage from New York Times gives specific evidence and statistics that show how America was easily able to put out millions of Mexican farmers. Because America was able to make corn better and faster, and because free trade was active, Mexico and Canada were much more adamant in taking America’s corn rather than the poor farmers’. In addition, America’s corn was also much cheaper because it was easy to make and was produced in high numbers, while the farmers in Mexico had to work hard in the fields with less advanced tools. As America’s corn piled up in Mexico, Mexican farmers also stopped working, and some even moved to the U.S. to work there instead. According to another article, “...the agricultural elements of the pact were brutal on Mexico's corn farmers. A flood of U.S. corn imports, combined with subsidies that favor agribusiness, are blamed for the loss of 2 million farm jobs in Mexico. The trade pact worsened illegal migration, some experts say, particularly in areas where small farmers barely eke out a living.” This statement also displays the struggles and impacts that were inflicted upon Mexico and its

Even though the impact of NAFTA has fundamentally changed Mexico in many ways; now, people have access to electronic appliances, expensive clothes and luxury cars, the treaty never met it promises. For example, the migration from Mexico to the United States, did not stop as president Bill Clinton argued. According to the article, “A fair farm bill”, the president of the time, Bill Clinton argued that NAFTA would eliminate the necessary large-scale of migration from Mexico because of the creation jobs and other redundant projects. However, that was not the case due to the fact that in between 2002 and 2005, Mexico defeated countries such India, the Philippines and Turkey in the role of global migration (Institute). Furthermore, the Institute for Agriculture and Trade Policy states on the article “A fair Farm Bill” that during the period of 2002 and 2005, “… the number of unauthorized immigrants from Mexico increased by 1.5 million to 6.2 million, with a calculation of 500,000 undocumented Mexicans entering the United States per year.” The provided data proves that NAFTA

On the plus side for Mexico, the auto industry has taken off, skills have improved and manufacturing has increased — and not just low-skilled factory jobs. All due to the creation of NAFTA. NAFTA has to be considered an overall success for the country of Mexico. Now the Mexican and Canadian economies are similar in size. In addition to NAFTA helping Mexico, NAFTA changes have helped the company Ford in the U.S.

NAFTA having turned twenty years old in 2014 it is important to view its impact of the automotive industry. Automotive sales between the countries have increased both in sales and overall production. With that being said there was a clear winner between the “3 Amigos” In 1994 when NAFTA was ratified US car exports to Mexico increased 685% which resulted in a increase of $437 million in profits, along with that in Mexico production of automobiles has tripled. The result of the boom in Mexico didn’t fare well for the United States or Canada. Production in Canada saw little to minor increases in production. While the US saw a double-digit decline in production of automobiles.

Trade agreements will always help countries like Mexico. NAFTA by itself increased the economy of Mexico significantly by itself. The auto industry has taken off, skills have improved and manufacturing has increased — and not just low-skilled factory jobs (Beltrame, 2013). With increasing manufacturing, the export of Mexican goods have increased as well. The value of Mexican goods exported to the United States grew from $39.9 billion in 1993 to $210.8 billion in 2007, an increase of 437 percent (Sommer, 2008). At the beginning of the deal Mexico had the smallest economy out of the three. Now the Mexican economy is on par with Canada, allowing for an increase in Middle Class in Mexico. As you can see Trade agreements allow Mexico to increase productivity, allowed skills to improve and export more products. When America invested more into Mexico, the Gross Domestic Product increased by 50 percent (Sommer, 2008).

Mexican Businesses Flourish while Farmers Parish. In recent years NAFTA has consistently undercut traditional labor and lifestyles while increasing wealth inequality. NAFTA , for years has affected the income of several Mexican farmers, who have been in agriculture for years. Farmers cannot compete with the influx of cheap US-grown produce coming into Mexican markets, and as a result Mexico has been experiencing a steady decline in income, poverty, and forced migration.