Nafta: the Good, the Bad and the Ugly
Running head: NAFTA
NAFTA:
The Good, the Bad and the Ugly
ECO305-0803B-14 Global Managerial Economics
Instructor: Professor Ray Bell
08/28/2008
Abstract
In 1994, North American Free Trade Agreement (NAFTA) was born. Between Mexico and the United States, NAFTA began by eliminating all non-tariff restrictions to agricultural trade. A phased approach was established to create a smooth transition to free trade with Mexico. Economically the impact on Mexico has been significant. Trade between United States and Mexico has grown 300% from calendar 1993 to calendar 2002. However, there are skeptics. Mexico’s strong growth in exports under NAFTA has not translated into strong economic and social progress. The environmental impact of NAFTA on Mexico continues to be an issue. The area known as the Maquilador, is labeled as an environmental and health disaster. The Maquiladora has grown steadily since NAFTA took effect. Underemployment and work in jobs that are low paying and low-productivity has increased significantly since the early 1990s. While it is true that in order for an under developed country to move more rapidly into an effective exporter of domestic product a free trade system with developed neighboring countries is a huge boon, the growing pains associated with the leveling of the playing fields are evidient.
In 1994, Mexico, Canada, and the United States entered into one of the worlds largest free trade regions called the North American Free Trade Agreement (NAFTA) (Salas, 2005). The most noteworthy feature of the agreement is that it between two highly economic and socially developed countries and one still developing. The boost in trade and the increased financial flow between these countries has resulted in one of the more economically merged areas in the world.
By agreement, NAFTA began by eliminating all non-tariff restrictions to agricultural trade between the United States and Mexico. Some tariffs were removed immediately, while others are
NAFTA:
The Good, the Bad and the Ugly
ECO305-0803B-14 Global Managerial Economics
Instructor: Professor Ray Bell
08/28/2008
Abstract
In 1994, North American Free Trade Agreement (NAFTA) was born. Between Mexico and the United States, NAFTA began by eliminating all non-tariff restrictions to agricultural trade. A phased approach was established to create a smooth transition to free trade with Mexico. Economically the impact on Mexico has been significant. Trade between United States and Mexico has grown 300% from calendar 1993 to calendar 2002. However, there are skeptics. Mexico’s strong growth in exports under NAFTA has not translated into strong economic and social progress. The environmental impact of NAFTA on Mexico continues to be an issue. The area known as the Maquilador, is labeled as an environmental and health disaster. The Maquiladora has grown steadily since NAFTA took effect. Underemployment and work in jobs that are low paying and low-productivity has increased significantly since the early 1990s. While it is true that in order for an under developed country to move more rapidly into an effective exporter of domestic product a free trade system with developed neighboring countries is a huge boon, the growing pains associated with the leveling of the playing fields are evidient.
In 1994, Mexico, Canada, and the United States entered into one of the worlds largest free trade regions called the North American Free Trade Agreement (NAFTA) (Salas, 2005). The most noteworthy feature of the agreement is that it between two highly economic and socially developed countries and one still developing. The boost in trade and the increased financial flow between these countries has resulted in one of the more economically merged areas in the world.
By agreement, NAFTA began by eliminating all non-tariff restrictions to agricultural trade between the United States and Mexico. Some tariffs were removed immediately, while others are
References: Salas, C (2005). NAFTA AT ELEVEN. Retrieved on August 29, 2008, from Economic Policy Institute Web site: http://www.epi.org/content.cfm/briefingpapers_nafta_mx Martinez-Vazquez, J (2001, September). The Impact of NAFTA, The North American Free Trade Agreement . Retrieved on August 28, 2008, from The World Bank Web site: http://www-wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2001/10/05/000094946_01092504010964/Rendered/INDEX/multi0page.txt Kose, Meredith and Towe, (2004). How has NAFTA affected the Mexican economy? Retrieved on August 29, 2008, from International Monetary Fund web site: http://www.imf.org/external/pubs/ft/wp/2004/wp0459.pdf Lenderman, Maloney and Serven, (2007). THE “NEW REGIONALISM” AND NORTH-SOUTH TRADE AGREEMENTS. Retrieved on August 28, 2008, from UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT Web site: http://www.unctad.org/en/docs/tdr2007ch3_en.pdf Economic Policy Institute, (2001). NAFTA AT SEVEN Its impact on workers in all three nations. Retrieved on August 28, 2008, from Economic Policy Institute Web site: http://www.epi.org/briefingpapers/nafta01/nafta-at-7.pdf Mumme, S (1999, October). NAFTA and Environment. Retrieved on August 28, 2008, from Foreign Policy in Focus Web site: http://www.fpif.org/briefs/vol4/v4n26nafta_body.html Salit, J (1997, September 16). The Environmental Impact of NAFTA . Retrieved on August 28, 2008, from Silicon Valley Journal Web site: http://www.siliconvalleyjournal.com/trade/tradepapers/environmental.html