NAFTA and Mexico's Trade Future

NAFTA: The agreement signed between the 3 North American countries (Mexico, the United States and Canada) on 17 December 1992 and which entered into force on 1 January 1994, has been one of the most important trade agreements for Mexico for more than 20 years.

NAFTA is a key part of the economic liberalization process of the three economies as it has been the forerunner of increased demand for products and access to supplies, an attraction for investment foreigners, higher numbers of jobs and better workerpay

How does NAFTA affect Mexico?

One of the biggest advantages presented with this agreement is the lowering of costs and increased options for consumers in the 3 nations. The tariff reduction benefits Mexicans, who pay less for the products they buy, while allowing food distributors in other countries to buy cheap Mexican crops.

Another great advantage is the strength that dominates the rest of the world against the protectionist actions of other foreign nations.

While the interdependence created by free trade agreements brings powerful benefits, all nations can suffer if ties are ever broken and the possibility that countries' industries may be paralyzed is great.

Scenarios for NAFTA and Mexico

The expansion newspaper recently published an article detailing the 3 scenarios that could be experienced for NAFTA renegotiation in 2018.

In the first scenario, negotiations will continue after the original limit, but Mexico, the United States, and Canada reach an agreement to update NAFTA in mid-2019.

In a second scenario the United States might decide to leave NAFTA, but it achieves a bilateral agreement with Mexico based on World Trade Organization (WTO) rules.

In a more tragic scenario, it could be for the United States to leave NAFTA and impose trade restrictions on Mexico, leading to a recession in the country.

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