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NAFTA (Successes (Mexico (Encourages Mexico to have trade agreements with…
NAFTA
Successes
Canada
In the first five years of NAFTA, visible trade with the US reached $500 billion in 1999. During the same period, visible trade with Mexico doubled to reach $10 billion.
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USA
The United States exported $136.5 billion worth of goods to Mexico in 2007, up 242 percent since 1993
U.S. employment rose to 137.6 million in 2007, an increase of 24 percent.
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Mexico
The new market is encouraging Mexican companies to adopt higher foreign standards and business practices. This will gradually improve the competitiveness of Mexican business.
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U.S. goods and services trade with Mexico totaled an estimated $600 billion in 2016, a significant increase from the $200 billion figure in 1999.
Mexico has achieved significant market penetration in food and live animals, beverages and tobacco, machinery and transport equipment, and miscellaneous manufactured articles.
Of all the Latin American nations, Mexico holds the greatest promise of development as a consumer market.
The classical economic argument (following Ricardo’s Theory of Comparative Advantage) is that all three countries would be better off with free trade as they would specialize increasingly in what they are best at - NAFTA a “win-win situation” for all concerned.
Overview of NAFTA
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Objective is to eliminate most tariffs and other restrictions on free trade and investment between the US, Canada and Mexico by the year 2003. Remaining tariffs will be removed by 2008
Established an unique relationship between a poor 3rd world nation and two of the world's richest countries
EVALUATION
Some analysts say it is too early to judge NAFTA’s impact, partly because many of its provisions have yet to take effect
Opinion about NAFTA remains divided, particularly in the US
Trade agreements are directly influenced by economic changes in individual countries and globally, such as changes in income and exchange rates
Failures
Canada
As Canada is distant from Mexico, it has not experienced some of the difficulties that have arisen between the US and Mexico because of their common border. However, environmental groups in Canada have voiced similar concerns to those raised in the US.
Mexico
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US companies moving to Mexico to take advantage of lower wage rates (in 1999, the average factory worker in the US earned more than eight times as much than the Mexican counterpart)
Small-scale Mexican farmers are exposed to large-scale high technology American and Canadian agribusinesses
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At present Mexico has to import more than 50% of its milk supply. Most comes from the US, along with many other agricultural products.
Environmental group Sierra Club criticized the result for the increasing environmental degradation in Mexico is due to the US taking advantage of the lax/loosly enforced environmental legislation