North American Free Trade Agreement and Rio Grande

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Cilia Martinez
SOCI-1301P05 NAFTA impact on Rio Grande Valley
NAFTA means the North America Free Trade Agreement; it went into effect January 1, 1994. It brought U.S.-Canada-Mexico together to an open free trade. In general, it mandated eliminating trade barriers by 2008. For many products the agreement did away with tariffs and other restraints immediately. Agriculture and apparel were the main sectors. NAFTA also implemented intellectual-property protections, established dispute-resolution mechanisms, and put into place regional labor and environmental safeguards. Its proximity to Mexico and fast-growing, binational job market are major factors in the Rio Grande Valley’s economy. They’re a large part of the reason employment has increased at a faster, steadier pace in the Valley than in the United States, Mexico or Texas as a whole. Despite rapid job creation, the Valley remains relatively poor. The McAllen, Edinburg, Mission area ranks last among the nation’s 361 MSAs, with a per capita income of $15,184 a year, less than half the national average of $31,472. The Brownsville, Harlingen MSA comes in next to last at $16,308. The combination of rapid job growth and low income is unusual. In a study covering 1967 to 1997, Dallas Fed economist Keith Phillips found weak employment gains in other states low-income counties—annual averages of 2 percent in Kentucky, 0.4 percent in West Virginia and 0.3 percent in Mississippi. Valley employment, by contrast, rose 3.4 percent a year over the three decades. More recent data confirm that the Valley is creating jobs at an above-average rate, a trend that dates back to at least 1969. The McAllen MSA posted the strongest gains of all the Texas–Mexico border metros from 1997 to 2003, with employment growing an average 4.6 percent. Brownsville’s 3.1 percent job growth was nearly twice as fast as Texas’...
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