Pros And Cons Of Nafta

The North American Free Trade Agreement (NAFTA) is a trilateral economic agreement signed in 1992 by the Canadian Prime Minister Brian Mulroney, the Mexican President Carlos Salinas and the U.S president George H.W. Bush that took effect on January, 1994.

When Mexico decided to open its economy to the world the country was seeking for new horizons to accomplish its trade and FDI liberalization; the idea to purse and agreement with its North American partners was the beginning. As it was expected every country had its own motivations to reach the trilateral agreement. In one side, Mexico´s main motivation was to build a stable economy that in the long run could be able to support a progressive economic development through trade and foreign investment.

Before NAFTA, Canada and Mexico have already established further trade relationships with United States. The Canadian and American economies started its trade relations concentrating exclusively on the automotive sector. In 1965, Canada and U.S. signed the “Automotive Products Trade Agreement”. Once their economic relations strengthened and solidified, the Auto Pact transformed formally into the Canada-United States Free Trade Agreement. This was exactly the FTA that Mexico pursed with these countries. Once Mexico joined to its North American partners it converted into NAFTA in 1994.

When the Mexican economy was under import substitution strategy the country had remarkable trade protectionism. As a matter of a fact, Mexico - U.S. had trade deficit in order to lessen this matter, both countries established further diplomatic relations. For that reason, the Mexican government encouraged trade with U.S. through the implementation of some National Programs in collaboration with United States