Is NAFTA good for America and Mexico?

Topics: North American Free Trade Agreement, Mexico, International trade Pages: 3 (837 words) Published: March 13, 2014


The NAFTA agreement and its impact on Mexican and US Farmers (corn products) Is NAFTA good for America and Mexico?

The North American Free Trade Agreement (NAFTA) is a tri-country agreement signed by the governments of Canada, Mexico, and the United States and come into affect on January 1st, 1994. Its primary purpose is to eliminate most barriers of trade and investment between the three countries. This also included many tariffs being removed immediately between the United States and Mexico, with others being phased out over periods of 5 to 15 years. Although there has been a dramatic increase in corn trade between the U.S. and Mexico since 1994, assessment of NAFTA’s contribution to this growth is difficult to measure. The impact of multiple factors, such as a series of severe droughts, domestic policy reforms, and environmental forces affecting the price, demand, and supply conditions in each trading country might have affected such enormous growth.

On a positive note, NAFTA increased farm exports from the U.S. because it eliminated high Mexican tariffs. Mexico is the top export destination for beef, rice, soybean meal, corn sweeteners, apples and beans. It is the second largest for corn, soybeans and oils. As a result of NAFTA, the percent of U.S. agricultural exports to Mexico has grown by 242% since 1993. NAFTA eliminated trade barriers in nearly all highly regulated service and helped lower hidden costs of doing business by requiring governments to publish all regulations. One of the most important benefits of NAFTA has been to reduce U.S. reliance on oil imports from Middle East and dictatorships like Venezuela as oil can now be imported from Mexico at competitive rates due to elimination of tariffs. Lastly, NAFTA helped reduce investors' risk by guaranteeing they will have the same legal rights as local investors. Therefore investors can make now make legal claims against a government if it nationalizes their industry or takes...
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