NAFTA Essay

After the establishment of the CUSFTA, Canada and the United States commenced agreement with Mexico for southern expansion of the agreement. In December 1992, the three countries Canada, USA and Mexico signed the North American Free Trade Agreement (NAFTA). This agreement, which came into existence on January 1, 1994, was the first regional integration agreement involved both a developing and developed countries. In short, the NAFTA is an expanded version of the CUSFTA.This agreement consists of advances in areas such as government procurement, intellectual property and investor´s rights, also more severe origin rules.

The impacts on Mexico of a free trade treaty with Canada and the United States are to be more important, for many reasons.

Table 5 shows that US firms have extended their occurrence in Mexico, but more of the investment enhances carried before the formal discussions held regarding NAFTA was started. The US FDI situation in Mexico has not rise that much since 1992, and the Mexico share in total US investment abroad has decreased during the past years. This states that outsiders depends on the current inflows of FDI to Mexico.These investments are almost certainly heading to the local market, in reaction to the improving economic of country and institutional environment, but the investment flows are also possibly to imitate degree of investment diversion and investment formation. To some extent that Mexico has become a comparatively more significant supplier to the US market through trade formation or trade diversion, foreign multinationals are to be reacted by enhancing their production capacity in

A uniformly imperative stimulus must have been the wide-ranging improvements of the country’s FDI regulation that originated in the mid-1980s and finally concluded with the NAFTA. The Mexican regulatory framework for FDI was restraining and provides as a hindrance for investment from abroad. In the Mexican debt crisis, these regulations where distorted spectacularly in 1989 to draw foreigners to spend in Mexico. It emerges that US investors reacted sturdily to this first round of reforms. A few years later, the investment command was later loosen through the