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Free Research Paper on NAFTA

Free example research paper on NAFTA:

For the past 15 years Mexico’s major economic concern focused on macroeconomic policy. It shares the border with the wealthiest economy in the world so the government that tries to expand the Mexican economy must be aware that its citizens demand a similar standard of living to its northern neighbors.

During 1980’s Mexican foreign economic policy significantly changed. These changes are noticeable in the U.S.-Mexico Agreement on Subsidies and Countervailing Duties, Mexico’s entry into the GATT, and the Framework Agreement, together with its working groups, which were meant to advance sectoral trade liberalization. “Clearly, trade liberalization has been the order of the day” (NAFTA, the model of development). By the 1990s trade-weighted import tariffs averaged only 6.5 percent. It is important to state that import licensing was decreased to only few sectors, where even in these license requirements were eased, and in this case imports accounted for a higher share of gross domestic product (GDP) than in the previous years (Grinspun, p.46).

The main concern of NAFTA is the implication of joining two countries with such different economic performance and such significant difference of wages. However the income differences in the United States and Canada, as well as levels of technical proficiency are nearly identical.

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Lusting states that “in those cases the main benefits of freer trade were expected to stem from efficiency gains generated by economies of scale and an intensification of competitive pressure in a broader market”(Lusting, North American Free Trade, p.2). The gains in Mexican economy can be seen in U.S. import diversion from other developing countries. However it becomes obvious that the wages of the workers in Mexico remind low comparing to American wages.

Agriculture became one of the most complex issues in the NAFTA negotiations, and considering that these are the countries with such a different levels of development it becomes even more complex. In Mexico agriculture is a major source of development, and it accounts of 25 percent of all the jobs, as well as 10 percent of the GDP. Mexico has some advantages in growing some crops, like fruits and vegetables, however the Mexican farmers are not competitive internationally, because of many reasons, and some of them are: location, labor costs, location. It is a challenge for Mexican farmers, who tend to be poor peasants on dry land, who survive by growing basic crops, like maize. Due to this fact they try to search for wage-work, in many case this force they to migration north of the border (Apendini, in Mexico, and the North American.., p.59-60)

In addition to NAFTA in 1994 Mexico adopted a stabilization package that included tighter government spending and monetary policies, salary limitation, and some expansion of privatization. This program intends to reassert macro control, limit the inflation, restore investor’s confidence, and to support the coming structural changes.
“ Indeed, the structural adjustment program now being implemented can be seen as accelerating trends toward North American integration that were underway under the liberalization program that started in the mid-1980’s, and that were further facilitated by the creation of NAFTA” (The impact of the Mexican crisis on trade, Robinson, paper).

Reforms initiated by NAFTA together with the structural adjustment programmes had a significant effect on Mexican farmers. Touched by cuttings in government support, the farmers are drown in a flood of imports, denied the access to American markets they were promised. Imports have increased by 14 percent a year or more since 1994 to 2001.
A lot of farmers are forced to abandon their crops that supported their families and leave up north in order to look for wage- paid work (Globalization is killing, Thompson, paper). Therefore the study would further seek how the reforms implemented by NAFTA affected the Mexican labor, especially farmers, and what connection and effect they had on migration, especially from rural areas. This would call for a critical look at the North American Free Agreement that put the farmers in a critical condition and force them to migrate leaving their crops, and families and counting on finding a better future in a rich neighboring country, where chap labor is being hired illegally and exploited for less than minimum wages.

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