Nafta
NAFTA: U.S. and Mexico Relations
Patricia Foster
Empire State College
U.S./Mexican relations have had their difficulties over the years. The most significant issue was the approval of the North America Free Trade Agreement (NAFTA) with Canada. Mexico knew it needed to step up its foreign investment but needed some help. Many Americans were hesitant and believed that after NAFTA was passed, their jobs would disappear and the manufacturing plants would move to Mexico. Some plants moved, however, the U.S. still reaped benefits from lower produce prices. Mexico benefited with the improved wages and working conditions as some manufacturing plants moved there. The down side of NAFTA is the price many Mexicans have had to pay for these slightly improved working conditions and wages. In addition, businesses the Mexican government had to privatize or basically put up for grabs were not part of the original intent when Mexico asked the U.S. for help. We begin by looking at how the negotiations for NAFTA began and why. In the 1970’s, Mexico had a huge oil boom from new resources. The country, as a whole, was doing quite well during this time. The problem was that Mexico’s economy largely depended on oil exports alone. When there was a collapse of production, many countries sought other means of importing oil. The collapse almost ruined Mexico’s economy because of the amount of foreign debt already owed. In 1978, Mexico applied for membership to the General Agreement on Tariffs and Trade (GATT). The Mexican government also wrote a protocol of accession, or waiver, which allowed Mexico to trade without having to join the GATT. The final decision was not to join the GATT and go with the protocol of accession. When oil prices dropped and inflation rose, Mexico found it hard to generate non-oil revenue. As a result, in 1986, Mexico resubmitted for membership to the GATT and began trade negotiations with the U.S. From 1987 to 1989,
Patricia Foster
Empire State College
U.S./Mexican relations have had their difficulties over the years. The most significant issue was the approval of the North America Free Trade Agreement (NAFTA) with Canada. Mexico knew it needed to step up its foreign investment but needed some help. Many Americans were hesitant and believed that after NAFTA was passed, their jobs would disappear and the manufacturing plants would move to Mexico. Some plants moved, however, the U.S. still reaped benefits from lower produce prices. Mexico benefited with the improved wages and working conditions as some manufacturing plants moved there. The down side of NAFTA is the price many Mexicans have had to pay for these slightly improved working conditions and wages. In addition, businesses the Mexican government had to privatize or basically put up for grabs were not part of the original intent when Mexico asked the U.S. for help. We begin by looking at how the negotiations for NAFTA began and why. In the 1970’s, Mexico had a huge oil boom from new resources. The country, as a whole, was doing quite well during this time. The problem was that Mexico’s economy largely depended on oil exports alone. When there was a collapse of production, many countries sought other means of importing oil. The collapse almost ruined Mexico’s economy because of the amount of foreign debt already owed. In 1978, Mexico applied for membership to the General Agreement on Tariffs and Trade (GATT). The Mexican government also wrote a protocol of accession, or waiver, which allowed Mexico to trade without having to join the GATT. The final decision was not to join the GATT and go with the protocol of accession. When oil prices dropped and inflation rose, Mexico found it hard to generate non-oil revenue. As a result, in 1986, Mexico resubmitted for membership to the GATT and began trade negotiations with the U.S. From 1987 to 1989,
Bibliography: Cameron, Maxwell and Tomlin, Brian; The Making of NAFTA, How the Deal was Done; Cornell University Press, 2000; pp Labor Notes, 1992; pp. 3, 9, 31, 61. Orme, William; Understanding NAFTA, Mexico Free Trade and the New North America; University of Texas Press, 1996; pp Smith, Geri and Lindblad, Cristina; Mexico: Was NAFTA Worth It?; Business Week Magazine, December 22, 2003; www.businessweek.com United States Trade Representatives; NAFTA: Decade of Success; July 1, 2004; www.ustr.gov