The North American Free Trade Agreement

The North American Free Trade Agreement (NAFTA) is intended to promote free trade among the countries of North America by removing trade barriers, tariffs, quotas, and other such barriers. The agreement is quite extensive and includes many provisions related to such things as plant inspection and even wages. The agreement has been negotiated among Mexico, the United States, and Canada, and it has been much discussed recently in terms of what it will mean for the United States and whether on balance it can be considered a positive or negative move for the U.S. The same questions can be raised with reference to Mexico and to the benefits that might accrue to Mexico if the agreement is passed, and an examination of the benefits that will occur from the Mexican point of view may demonstrate some of the benefits and liabilities from the U.S. point of view as well.

NAFTA is a historic agreement that has not been examined as closely as it should on either side of the border. Mexico conducts as much as 90 percent of her trade with the United States. The premise of the agreement is that free trade should be left exclusively to the free market. In practice, this means giving free rein to those who command the most power and the most wealth. The agreement also covers only things economic, such as financial matters, investment, intellectual property, and commerce as well as dispute resolution, banking, transportation, and services. It does not include other topics--the politica

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y the foundations for an eventual and controlled democratic transition (Castaneda, 1993, 66). However, Castaneda states that NAFTA itself entails great risks, something he says has been overlooked. No country has ever attempted developing an export manufacturing base by opening its borders so quickly and indiscriminately to more efficient and lower-cost producers such as exist north of the border, and no nation has so willingly sacrificed an industrial policy or an equivalent form of managed trade. Mexico is unilaterally announcing these advantages and so will lose far more jobs in the first few years than it creates, while old industries and agricultural produces die off, are swallowed up, or join with foreign ventures (Castaneda, 1993, 66). Castaneda notes that the Mexican government has been using NAFTA as a way of addressing Mexico's severe economic problems and has been moving this way singlemindedly. The leaders have felt that the only way to attract the foreign capital necessary to stabilize the exchange rate and to fund the ensuing current account deficit would be to provide hesitant potential investors with guarantees of continuity through economic policy and access to the U.S. market through an agreement with the U

Category: Economics - T