NAFTA

NAFTA, or the North American Free Trade Agreement is a free trade pact among the United States, Mexico and Canada; it began in 1994 and continues to the present. It created the world's biggest free-trade area and required the elimination of every trade barrier between the signers for fifteen years. It also included agreements on the environment and labor. This gave Canadian and U.S. companies access to Mexican markets.

Passage

The pact was originally negotiated by President George H. W. Bush but was made into law by President Bill Clinton, who overcame strong opposition from liberals, environmentalists and labotr unions and whorked with Republicans to pass the legislation. NAFTA followed the Free Trade Agreement (FTA) of 1989 between the U.S. and Canada.

Impact

NAFTA) marked a major change in US-Mexico relations in the post-Cold War era and showed an important tendency in economic globalization. By establishing a relationship of economic cooperation and collaboration and practicing economic liberalization and integration, the United States, Canada, and Mexico all benefited. Furthermore, NAFTA propelled reform of the political system in Mexico and created a chance for Mexico to open up to the world and establish a foreign-oriented economy.

Mexico

NAFTA greatly boosted Mexico's exports to the U.S. and made the country more attractive for foreign investment. It also helped it to weather the 1994-1995 peso crisis by ensuring access to U.S. and Canadian markets. There has been a growth in the orther states of Mexico of large multinational companies whose maquiladora assembly operations have gained an increasingly larger proportion of Mexico's export production. Meanwhile the proportion of production by smaller manufacturing firms and other producers has steadily shrunk. Mexico continues to be an importer of technology and innovative processes, and likewise remains heavily dependent on the performance of the U.S. economy. Manufacturing remains concentrated in the Federal District, Jalisco and Nuevo Leon. Mexico's inadequate road system, particularly in the central and southern states, is a serious impediment to attracting foreign investment in those regions, as well for exploiting the full potential of NAFTA.

Further reading

• Buhner-Thomas, Victor, et al. Regional Integration in Latin America and the Caribbean: The Political Economy of Open Regionalism. (2001) 322 pp.; important essays by scholars
• Cameron, Maxwell A., and Brian W. Tomlin. The Making of NAFTA: How the Deal Was Done (2000), scholarly study.
• Chambers, Edward J., and Peter H. Smith, eds. NAFTA in the New Millennium. (2002) 520 pp. scholarly studies on trade, labor, migration, transport, and the environment.