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The Pros And Cons Of NAFTA

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NAFTA brought blessings to the three members. According to Berrien (2017), trade between the USA, Canada and Mexico quadrupled, from $297 in 1993 billion to $1.14 trillion in 2015. As a result, this promoted rapid economic development and increased profits for the USA, Canada and Mexico. It lowered selling prices for consumer goods as well. In 2016, Mexico was the United States' 2nd largest goods export market. The US goods exports to Mexico in 2016 were $231.0 billion, decrease by 2.0% ($4.8 billion) from 2015 but increased by 72.7% from 2006. The USA exports to Mexico raised by 455% compare to 1993 (pre-NAFTA). The US exports to Mexico accounted for 15.9% of overall USA exports in 2015(U.S.- Mexico Trade Facts). From the above numbers, we …show more content…

First, according to Hufbauer & Schott(1993), NAFTA reinforces the extensive market-oriented policy reforms implemented in 1985. The reforms have resulted in a real annual growth of 3-4% in 1990s and a decreasing rate of inflation. NAFTA gave a major boost to Mexican farm exports to the United States, which have tripled since NAFTA’s implementation(McBride & Sergie, 2017). Thousands of manufacturing job vacancy have also been created in the country, and it had a positive impact on Mexican productivity and consumer prices.
On the other hand, according to Amadeo(2017), Mexican policymakers regarded NAFTA as an opportunity to both “accelerating” and “locking in” these hard won reforms to the Mexican economy.Apart from liberalizing trade, Mexico’s leaders lowered public debt, proposed a balanced budget rule in order to stabilized inflation rate. What’s more, they built up the country’s foreign reserves to cater for emergency cases. Later, when Mexico was seriously stroke by the 2008 US recession due to its overdependence on exports to the US market, its economy was able to recover relatively faster. At the time, Mexican exports to the United States fell by 17% in 2009. Consequently, Mexico economy contracted by over 6%. However, Mexico returned to growth in just one year later. Its GDP expanded over 5%, and recorded a 2% drop in 2014 and …show more content…

Mexico enjoyed a cost advantage in assembly services for the USA economy. Therefore, Mexico’s role transformed into a subcontractor rather than producing simple consumer goods for greater upward mobility in the North American economy system. Meanwhile, loosen restrictions on foreign direct investment enabled crops in Mexico became part of North American production networks. This also played an important role in the alternation of wage patterns. In this way, Mexicans can gradually engage in more specialized and skills-oriented industry, in order to improve their living standard. According to Amadeo(2017), NAFTA brought modernization in the US auto industry by consolidating manufacturing and controlling the costs. Majority of the cars produced in North America are partly sourced from The USA, Canada and Mexico. The enhanced competitiveness of products permit the industry to defeat Japanese imports. As a result, Mexico exports more cars to the USA than Japan. In the past, Japan exported 2 times as many as Mexico. It is expected that by 2020, Mexico will manufacture one-fourth of all North American

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