In March of 1994, NAFTA (North American Free Trade Agreement) was signed by leaders of the United States, Mexico, and Canada. This agreement is about tariffs and cooperation of trade among the three countries in creating an open environment to trade without restraint. The three countries ultimately receive many benefits and advantages from NAFTA, however, there are also disadvantages of this agreement.
NAFTA continues to have a major impact on the people in all three countries. There are obviously short and long-term costs of adjustment, which will certainly hit some industries, regions, and workers harder than others. There are some definite winners in the agreement and definite losers in the agreement, along with ongoing disputes. Whether somebody is a labor worker, investor, consumer, or ordinary citizen in all three countries, they may or could be affected. The final verdict on the North American Free Trade Agreement may in fact not fully be realized for many years to come. The major advantage for each country is free trade and more exportation.
Regional integration and free trade gives countries the advantages of competition and trade. U.S. consumers have enjoyed the benefits of lower cost blue jeans, fruits and vegetables as a result of integration between Mexican and U.S. markets. Free trade also means that common food production and marketing systems that ensure food safety and improve food security can be developed across countries.
However, regional integration does not come without costs. Farmers in states such as California, Florida, Oregon, Michigan, Texas and Washington have had to adjust to supplies of Mexican fruits and vegetables entering the U.S. market. Likewise, U.S. farmers have been able to export more feed grains and livestock products to Mexico. At the same time, Mexican hog and poultry producers have had to adjust to increased supplies of meat imported from the United States. U.S. wheat and beef producers had have to adjust to integration of Canadian products. Many supporters of NAFTA will argue it has been demonstrated that the benefits of free trade weigh heavily on the plus side.
Upon research, under NAFTA, total U.S. trade with Mexico and Canada increased by 37 percent from 1993 to 2002, compared with 31.5 percent with the rest of the world. U.S. foreign direct investment in Canada more than doubled, while in Mexico it tripled. U.S. agricultural trade with Canada and Mexico almost doubled over the same period, while trade between Canada and Mexico grew more than 150 percent. Across the NAFTA countries, the mean annual growth rate for agricultural trade has exceeded 8 percent since 1990, the year after the U.S.-Canada Free Trade Agreement began to go into effect.
In Mexico, the government stipulates that NAFTA produces more foreign investment. The industries that seem to gain the most with NAFTA are the maquiladoras (assembly plants) and the automobile industry. Production is cheaper in Mexico than in many other...