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Effect of NAFTA on the States That Border Mexico |
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The North American Free Trade Agreement (NAFTA) seeks to create a trading bloc consisting of Canada, the United States, and Mexico. The bulk of the treaty was negotiated by the Bush administration, but it falls to the Clinton administration to coordinate its ratification by Congress. The agreement is the subject of much controversy over whether American jobs would be lost or gained, and what the eventual affect of the agreement will be on the American economy. This research seeks to understand the effect of NAFTA on a smaller scale; namely, the effect of the agreement on those states which border Mexico. To understand NAFTA's effect, it is necessary to understand the environment into which NAFTA will be implemented. Mexico effectively restructured its economy during the late 1980s. Prior to that time, the country was highly protectionist and socialist, unable to complete on an international basis, and heavily reliant on its oil reserves. In addition, Mexico had a high level of debt (much of it to American financial institutions). Under President Carlos Salinas de Gortari, the number of publicly held companies fell from more than 1100 in 1982 to just over 200 in 1992. During the same period, the public debt was halved, and inflation fell from 150 percent in 1987 to 12 percent in 1992. While still considered high by American standards during a recession, the relatively low rate of inflation has brought about new credit options and new opportunities in the internatio
surplus of approximately $10 billion, more than 190,000 new jobs could be created as a result, many of them in California.
California's chief concern about job loss is in the apparel industry, which enjoys a high profile in Los Angeles. While it is true that labor is less expensive in Mexico than in the United States, the apparel industry has not yet relocated to Mexico, and could easily have done so through the maquiladora program. Instead, apparel industry analysts suggest that the fashion and quality demands make it difficult for companies to relocate to Mexico. In addition, the transportation facilities in Mexico are considered to be inadequate to accommodate a mass inflow of American industry.
Los Angeles also has the second largest population of Spanish-speaking individuals in the world outside of Mexico City. This creates a natural link between California and Mexico that other states do not have. In addition, California has a highly sophisticated environment technology business sector which can take advantage of environmental restraints that may be built into NAFTA.
Arizona's exports were $4.8 billion in 1990, an increase of 18 percent over 1989 and 59 percent greater than in 1987. Arizona's top trading partner
Category: Economics - E
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Carlos Salinas, Juarez Monterrey, United Mexico, Loan Fund, Program Mexico, Angeles Houston, Mexico Arizona, Mexico NAFTA, California Texas, Mexico California, relationship mexico, trade mexico, exports mexico, los angeles, mexico nafta, business journal, california texas, apparel industry, mexico business, border mexico, journal commerce commercial, business journal 15, 4 4 , mexico business community, los angeles houston,
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