Global Business Essay

2998 words - 12 pages

According to Council on Foreign Relations (2011), North American Free Trade Agreement (NAFTA) represents an explicit trilateral free trade agreement, which was implemented in January 1994, and was given a signatory by the Democratic President, Bill Clinton. The major focus was to remove the various trade tariffs that were imposed on all products within Canada, Mexico and United States (U.S). The agreement conditions required that the tariffs be eliminated gradually. However, the agreement final aspects were not implemented completely until January 1, 2008.
The agreement led to removal of export tariffs within the various industries; agriculture was the central focus, but tariffs have also been reduced in several goods such as textile products and the automobiles. Further, NAFTA had an implementation of protections that dealt with intellectual properties. It devised the mechanisms that would be of great significance in dispute-resolution, and formulated regional labor and related environmental security measures that were to be adopted. The latter attracts several reactions of diverse nature from critics of the move. The critics advocate for more and stronger measures on this sector.
NAFTA has great impact in bilateral economic correlation between Mexico and U.S (Villarreal, 2010). Both countries have other ties apart from trade, which include: a myriad of security matters, very diverse issues on environment, many dynamics in the migration patterns, and issues related to health. Various effects of NAFTA on Mexico, and the economic situations for Mexican, influence the political desires and economic patterns within U.S.
Villarreal (2010) argues that, in 1990, Mexico presented to U.S an idea of establishing Free Trade Agreement (FTA). The major aim for Mexico was to ensure that Mexican economy stabilizes and at the same time, economic development takes place. This would result in attraction of several potential foreign investors, an increase in the quantity of exports from the country, and creation of several jobs. The Mexican economy was going through tough times in the better part of 1980s, which resulted in development of a deeply rooted system of poverty. Supporters’ of the free trade agreement expectations at this time was based on the facts that NAFTA would create and improve confidence for various investors in Mexico, bring a change in the exports, introduce and create jobs that were of high skills, raise the wage rates for Mexicans, and minimize the poverty levels that were so eminent. In addition, there was a major expectation that, NAFTA would reduce the differentials that were expressed in income levels for the Mexicans and U.S.
In early 1990s, Mexico received an increase in the number of foreign investment that resulted from investors’ confidence build-up by NAFTA. However, there have been seasons that are characterized by both positive and negative economic growths after signing of the deal (Villarreal, 2010). This depicts that,...

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