Nafta's Effect on Mexico

Topics: North American Free Trade Agreement, United States, Mexico Pages: 3 (889 words) Published: April 12, 2013
NAFTA’S effect on Mexico

The North American Free Trade Agreement, often referred to as NAFTA, is an agreement between the U.S., Canada and Mexico. The purpose of NAFTA is to reduce and eventually erase trade barriers, which would make it easier for the three countries to import and export goods and services more freely between each other. NAFTA had started as an agreement between the United States and Canada, and then in 1992, Mexico joined the venture. The union of these countries was logical, mainly because of their proximity to each other and the benefits that each would soon come to realize. Some of the key contents in the NAFTA agreement was that in a ten year period, most all of the tariffs on the goods would be removed, it provided for the protection of intellectual property, easier access to invest in foreign industries, that is with a few exceptions which would exclude key markets for that country. An example of this is that Mexico was not willing to open the door to its energy and railway industries. NAFTA also meant freer flow of services, which would allow unrestricted access to some of the country's markets. Even more importantly, NAFTA made sure that environmental and ethical standards were in place. Other objectives include increase business investment, and help North America become more competitive in the global marketplace. NAFTA benefit consumers in many ways by providing lower prices and better quality products and also stronger health and safety standards. Since the introduction of NAFTA, Mexico’s economy has grown exponentially. The Mexican economy is strongly tied to economic conditions in the United States, making it very sensitive to economic developments in the United States. Mexico is highly reliant on exports and most of Mexico’s exports go to the United States. In 2009, Mexico’s exports quadrupled to $292 billion. Under NAFTA the United States became the largest source of foreign direct investment in Mexico, accounting for over...
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