Written Dossier

“Poor Mexico, so far from God and so close

to the United States.” Porfirio Díaz, attrib.
Has NAFTA been a success and why (not)?

Mateus Vasconcelos Albuquerque

1st Article – “The Broken Promise of Nafta”
By JOSEPH E. STIGLITZ / The New York Times; Jan. 6, 2004
<https://www.nytimes.com/2004/01/06/opinion/the-broken-promise-of-nafta.html> [Access in
3/11/2018]
The celebrations of Nafta's 10th anniversary are far more muted than those involved in its
creation might have hoped. In the United States, the North American Free Trade Agreement has failed
to fulfill the most dire warnings of its opponents and the most fervent expectations of its supporters.
In Mexico, however, the treaty remains controversial and even harmful -- as do America's efforts to
liberalize trade throughout the hemisphere.
There is some good news. In America, the ''giant sucking sound of jobs being pulled out of this
country'' that Ross Perot predicted never quite materialized. The first six years of Nafta saw
unemployment in the United States fall to new lows. (Of course, to most economists there was little
basis for Mr. Perot's worries in the first place. Maintaining full employment is the concern of monetary
and fiscal policy, not of trade policy.) Nafta has brought some benefits to Mexico as well; it was trade
with America, fueled by Nafta -- not the bailout of Wall Street lenders -- that was responsible for
Mexico's quick recovery after the financial crisis of December 1994.
But while Mexico benefited in the early days, especially with exports from factories near the
United States border, those benefits have waned, both with the weakening of the American economy
and intense competition from China. Meanwhile, poor Mexican corn farmers face an uphill battle
competing with highly subsidized American corn, while relatively better-off Mexican city dwellers
benefit from lower corn prices. And as all but one of Mexico's major banks have been sold to foreign
banks, local small- and medium-sized enterprises -- particularly in nonexport sectors like small retail
-- worry about access to credit.
Growth in Mexico over the past 10 years has been a bleak 1 percent on a per capita basis --
better than in much of the rest of Latin America, but far poorer than earlier in the century. From 1948
to 1973, Mexico grew at an average annual rate of 3.2 percent per capita. (By contrast, in the 10 years
of Nafta, even with the East Asian crisis, Korean growth averaged 4.3 percent and China's 7 percent
in per capita terms.)
And while the hope was that Nafta would reduce income disparities between the United States
and its southern neighbor, in fact they have grown -- by 10.6 percent in the last decade. Meanwhile,
there has been disappointing progress in reducing poverty in Mexico, where real wages have been
falling at the rate of 0.2 percent a year.
These outcomes should not have come as a surprise. Nafta does give Mexico a slight advantage
over other trading partners. But with its low tax base, low investment in education and technology, and
high inequality, Mexico would have a hard time competing with a dynamic China. Nafta enhanced
Mexico's ability to supply American manufacturing firms with low-cost parts, but it did not make
Mexico into an independently productive economy.
When President Bill Clinton first asked the Council of Economic Advisers about the economic
importance of Nafta, early in his administration, our response was that potential geopolitical benefits
were far more important than the economic benefits. (Similarly, the European Union, for all of the
economic benefits that it has brought, is mainly a political project.)
America perhaps stood more to gain economically than Mexico, but the concrete gains were
likely to be small on both sides. Tariff rates on both sides were already very low, with Mexico's tariffs
being slightly higher than America's, and Nafta would not eliminate important nontariff barriers. The
disparity in income across the Mexican border is among the largest anywhere, and the resulting

2
migration pressure was enormous. Doing what little America could do to enhance growth in Mexico
would be good for Mexico, and good for America; and it was the right thing to do for our neighbor to
the south.
Unfortunately, much of the goodwill that the United States might have expected has been
squandered. First, America attempted to use barriers to keep out Mexican products that began to make
inroads in our markets -- from tomatoes to avocados to trucks to brooms. Despite the impressive efforts
of workers' rights groups, efforts to ease the life of immigrants have stalled. Recent moves in California
to prevent illegal immigrants from receiving driver's licenses and medical care have been a depressing
sign that conditions for Mexican immigrants in this country are getting worse.
Of course, Nafta was a far more modest project than the European Union. It did not envision
the free movement of labor, though that would have had a far larger effect on regional output than the
free movement of capital, on which it focused. It did not envision a common set of economic
regulations, or even a common currency. But hidden in Nafta was a new set of rights -- for business -
- that potentially weakened democracy throughout North America.
Under Nafta, if foreign investors believe they are being harmed by regulations (no matter how
well justified), they may sue for damages in special tribunals without the transparency afforded by
normal judicial proceedings. If successful, they receive direct compensation from the federal
government. Environmental, health and safety regulations have been attacked and put into jeopardy.
To date, suits with claims in excess of $13 billion have been filed.
While many of the cases are still pending, it is clear that there was not a full and open debate
of the consequences of Nafta before passage. Conservatives have long sought to receive compensation
for regulations that hurt them, and American courts and Congress have usually rejected these attempts.
Now businesses may have accomplished indirectly, through treaty, what they could not get more
openly through the democratic political process.
Meanwhile, those harmed by the actions of the foreign firms, for instance by what they do to
the environment, do not have comparable protections of appealing to an international tribunal and
receiving compensation. The concern is that Nafta will stifle regulation, no matter how important for
the environment, health or safety.
All of this has important implications for the proposed Free Trade Area of the Americas, and
for countries thinking of signing onto bilateral trade agreements with the United States. Signing a free
trade agreement is neither an easy nor an assured road to prosperity. The United States has said it does
not want agriculture or nontariff barriers to be on the table in these talks. But while it refuses to give
in on these points, it wants Latin American countries to compromise their national sovereignties and
to agree to investor ''protections.''
In fact, the United States has been demanding that countries fully liberalize their capital
markets just as the International Monetary Fund has finally found that such liberalization promotes
neither growth nor stability in developing countries. Unfortunately, many of the smaller and weaker
countries will probably agree in the quixotic hope that by linking themselves to America, they will
partake of America's prosperity.
In the long run, while particular special-interest groups may benefit from such an unfair trade
treaty, America's national interests -- in having stable and prosperous neighbors -- are not well served.
Already, the manner in which the United States is bullying the weaker countries of Central and South
America into accepting its terms is generating enormous resentment.
If these trade agreements do no better for them than Nafta has done for Mexico, then both peace
and prosperity in the hemisphere will be at risk.

3
Summary

Stiglitz’s article points out the effects of NAFTA in the society and economy of the US
and Mexico after 10 years of its creation and why it’s impacts are controversial, specifically
for the last one, despite the expectations of its creators.
Although the accord has led to a fell in the unemployment rates in the US, contrarily to
what was predicted by some American politicians, and a faster recovery of Mexico from the
1994’s crisis, the article shows that the negative impacts of NAFTA to the North American
countries stay alarming. Stiglitz indicate that the new competition with the heavily protected
markets of the US and of Canada and the harder access to credit due to the selling of several
Mexico’s banks after the liberalization of its economy have led the bankruptcy of a lot of
Mexican small and medium agrarian companies, plus specifically corn producers.
The article points that the growth rate of Mexican economy has diminished compared
to the rate before NAFTA being signed, fact that, in addition to the increase in disparity of it
in relation to American economy and a reduction in the real wages of the country, has shown
that the accord has not being sufficient to make the nation’s economy independent of its better-
off neighbors. Migration to the US has been a major consequence of these impacts in Mexican
society, specially the unemployment due to the closing of medium and small agrarian producer
enterprises, which has been leading to severe measures against the illegal migration in this
country. Concrete gains have been small for either the American and Mexican sides of the
accord since its creation.
At the end the author indicate also the current tendency of the United States in
encouraging countries in liberalizing its economies and sign free trade agreements despite the
International Monetary Fund studies that show that it does not promote neither growth nor
stability in these nations and that it benefit only particular groups in the developed countries
all over America, not working in creating strong partners in the continent.

4
2nd article – “NAFTA and the Shangri-La of the Rule of Law”
By CLAUDIO LOMNITZ
Revista de la Universidad de México; May 2018
<https://www.revistadelauniversidad.mx/articles/8be59020-1574-4f09-b6ee-
6d101137fa8d/nafta-and-the-shangri-la-of-the-rule-of-law> [Access in 3/11/2018]

I once listened to a lecture in which one of the Mexican architects of the North American Free
Trade Agreement defended the project, claiming that in a country where the rule of law did not
previously exist, NAFTA had created zones that were strongly regulated by the economy and
monitored by the United States and Canada—thus, these zones operated in strict observance of the
terms of the Agreement and, as such, of the law. Seen from this interesting angle, NAFTA becomes a
mechanism for installing the rule of law in Mexico, and to abolish it would mean returning to an
economy governed by the arbitrariness that characterized the corruptible authoritarian regimes that
dominated Mexico from the time of Porfirio Díaz.
This argument is worth consideration, because today Mexico is disillusioned with the very ideal
of the rule of law. A critical exploration of the hypothesis that NAFTA has spearheaded the rule of law
in Mexico may offer clues to understand the crisis of that ideal, even when its costs have been so high
for wide segments of the population.
The vision of NAFTA as a mechanism to transform the Mexican state is an example of an older
idea, derived in part from lack of confidence in the internal forces of Mexican society and politics to
self-regulate according to the law, and in part from a certain amount of hope or faith that we could
perhaps arrive at the Shangri-La of the rule of law by subscribing to a series of international treaties.
One symptom of this syndrome (characterized by this blend of deficient internal confidence
and hope for reform stemming from the country’s belonging to the Concert of Nations) is that Mexico
gladly signs any international treaty set before it, without worrying whether or not it is in condition to
comply. The website of the country’s Supreme Court lists no fewer than 210 international treaties
signed by Mexico, but if we look at the articles of these treaties, we detect that in many cases—possibly
too many—Mexico signs agreements with which is in no condition to comply. To cite a few examples:
Article 6 of the International Covenant on Economic, Social and Cultural Rights (signed in
1981) establishes the “right to work,” as well as that said work should be “freely chosen.” Does the
Mexican state possess the resources to guarantee this right? Did it have them in 1981, when it signed
the treaty, or was it a pledge like the line from a Chava Flores 1 song: “Oh sure, I’ll give it to you
mañana.” If a Mexican citizen doesn’t have a job, where should she go to demand her right to work?
If Mexican citizens are coerced to continue working as members of gangs, for example, or as
prostitutes, where is the government agency dedicated to removing them from those situations and
redeeming their rights to freely choose their employment?
In 2001 Mexico announced its adherence to the International Convention for the Protection of
All Persons from Enforced Disappearance. Article 1 of that treaty stipulates that “No one shall be
subjected to enforced disappearance,” and Article 2 states that “No exceptional circumstances
whatsoever, whether a state of war or a threat of war, internal political instability or any other public
emergency, may be invoked as a justification for enforced disappearance.” Mexico signed this in the
middle of its war with the drug cartels—the very war that was also supported by the country’s

5
participation in international treaties such as the United Nations Convention Against Illicit Traffic in
Narcotic Drugs and Psychotropic Substances. Did the Mexican state have the resources to conduct a
war against drugs with legal methods that would prevent enforced disappearances? The data shows
that it did not (nor does it now).
What can all this mean? It seems to me a provisional conclusion would be that the construction
of the rule of law cannot occur merely through a country’s participation in all the international treaties
within reach, no matter how they may serve, in theory, to reinforce the law.
There are several reasons for this. One is the economy. In this regard, NAFTA established
terms to “level the playing field” for free competition among Canada, the United States and Mexico.
This meant, among other things, eliminating a series of subsidies and price guarantees for agriculture,
which led many rural farming communities to ruin. Could the disruption of this ruin be absorbed by
NAFTA itself? Legally, no. This is why the great migration of destitute farmers to the United States
occurred outside of the framework of the rule of law, and these rural citizens became “undocumented
workers,” an event whose asymmetrical political costs we continue to pay for today. This is also why
strict conformity with the Agreement’s terms resulted in the recruitment of many other impoverished
rural citizens to the production and distribution of illegal drugs.
This conclusion does not imply that it would be good for Mexico to leave NAFTA; there have
been too many sacrifices made, and the new United States economy has already forged transnational
chains of production that are very complex and difficult to dismantle. To leave NAFTA today could
wind up being as traumatic as it was, at the time, to enter into it—though I do not know this for certain.
What is clear is that the consolidation of the rule of law was not one of the ramifications of NAFTA.
This is due to the fact that each international commitment has its cost, which the Mexican state, most
of the time, has not been able to pay. This generates illegality. Sometimes, these pacts create conflicts
among themselves; for example, to fight the drug trade can be at odds with protecting human rights,
and the promise to “level the playing field” for free competition can contradict the government’s
commitment to guarantee freely chosen, legal work.
Of the more than 200 international accords in which Mexico participates, NAFTA has had the
most profound consequences; this is precisely why it is also the international treaty that most clearly
reveals that the rule of law in Mexico will have to be established with the material and political
resources that the State truly possesses. International order may offer support for the rights of
Mexicans, but it has not been able to guarantee them in any way.

6
Summary

The article sustains the thesis that NAFTA has failed guaranteeing the “rule of law” to
Mexico and supports a truly internal Mexican movement of self-regulation according to the
law.
Lomnitz begins showing that, for the Agreement supporters, getting out of NAFTA
would signify returning to the arbitrary times of Porfirio Diaz and other authoritarian
governments of the nation, epoch when the economy was based in the personal willings of the
governor. In fact, the creation of the free trade zone has obliged Mexico to drive its economy
in observance of the commerce rules established with NAFTA and, thus, has helped monitoring
the arbitraries of the Mexican state in this domain.
Neverthless, the author points that this argument is based in older ideas, which state that
Mexico had to subscribe to several treaties or agreements even if it is not possible to the country
to comply and act in accord with that. Several articles of Agreements signed by the Mexican
government show, for example, rights that the nation does not have conditions to guarantee to
its citizens along with measures impossible of being driven given Mexican state resources.
The observance to the treaties, in the case of NAFTA, has led to the impoverishment of
a portion of Mexican agrarian producers due to a disloyal competition with the US and
Canadian markets, but leaving the Agreement suddenly would bring to Mexico impacts worse
than those of the entrance to NAFTA’s. At the end, the article reiterates that, if the country
wants to implement the “rule of law” in its territory, this process has to be driven from inside,
i.e., with the political and structural material that the Mexican State has.

7
3rd Article – [Excerpt from] NAFTA’s Economic Impact (How
has it affected the Mexican Economy)
By JAMES MCBRIDE and MOHAMMED ALY SERGIE
Council on Foreign Relations; October 1, 2018
<https://www.cfr.org/backgrounder/naftas-economic-impact> [Access in 3/11/2018]

NAFTA gave a major boost to Mexican farm exports to the United States, which have tripled
since NAFTA’s implementation. Hundreds of thousands of auto manufacturing jobs have also been
created in the country, and most studies have found that the pact had a positive impact on Mexican
productivity and consumer prices.
The pact was the continuation of a decade of economic liberalization that saw the country
transition from one of the world’s most protectionist economies to one of the most open to trade.
Mexico had reduced many of its trade barriers upon joining the General Agreement on Tariffs and
Trade (GATT), the precursor to the WTO, in 1986, but still had a pre-NAFTA average tariff level of
10 percent.
Mexican policymakers saw NAFTA as an opportunity to both accelerate and “lock in”
these hard won reforms to the Mexican economy. In addition to liberalizing trade, Mexico’s leaders
reduced public debt, introduced a balanced budget rule, stabilized inflation, and built up the country’s
foreign reserves. Thus while Mexico was hard hit by the 2008 U.S. recession due to its dependence on
exports to the U.S. market—in 2009 Mexican exports to the United States fell 17 percent while its
economy contracted by over 6 percent—its economy was able to bounce back relatively quickly.
Mexico returned to growth in 2010, its GDP expanding over 5 percent, and subsequently falling to
around 2 percent in 2014 and 2015.
But Mexico’s NAFTA experience has suffered from a disconnect between the promises of
some of its supporters—that the pact would deliver rapid growth, raise wages, and reduce emigration—
and the deal’s more mixed outcomes. Between 1993 and 2013, Mexico’s economy grew at an average
rate of just 1.3 percent a year during a period when Latin America was undergoing a major expansion.
Poverty remains at the same levels as in 1994. And the expected “wage convergence” between U.S.
and Mexican wages didn’t happen, with Mexico’s per capita income rising at an annual average of just
1.2 percent in that period—far slower than Latin American countries such as Brazil, Chile, and Peru.
Mexican unemployment also rose, which some economists have blamed on NAFTA for
exposing Mexican farmers, especially corn producers, to competition from heavily subsidized U.S.
agriculture. A study led by CEPR economist Mark Weisbrot estimates that NAFTA put almost two
million small-scale Mexican farmers out of work, in turn driving illegal migration to the United States.
(Migration to the United States, both legal and illegal, more than doubled after 1994, peaking in 2007.
However, the flow reversed after 2008 as more Mexican-born immigrants began leaving the country
than arriving. Experts attribute this to stricter border enforcement, changing demographics in Mexico,
and the combination of fewer available jobs in the United States along with more in Mexico.)
Many analysts explain these divergent outcomes by pointing to the “two-speed” nature of
Mexico’s economy, in which NAFTA drove the growth of foreign investment, high-tech

8
manufacturing, and rising wages in the industrial north, while the largely agrarian south remains
detached from this new economy. As University of Pennsylvania economist Mauro Guillen argues,
Mexico’s rising inequality stems from NAFTA-oriented workers in the north gaining much higher
wages from trade-related activity.
Ultimately, many experts caution, Mexico’s recent economic performance has been affected
by many non-NAFTA factors. The 1994 devaluation of the peso drove Mexican exports, while
competition with China’s low-cost manufacturing sector likely depressed growth. Unrelated public
policies, such as land reform, made it easier for farmers to sell their land and emigrate. As UCSD’s
Hanson has argued, Mexico’s struggles have largely domestic causes: poorly developed credit markets,
a large and low-productivity informal sector, and dysfunctional regulation.

9
Summary

Although NAFTA being the responsible of a triplication of the farm exports in Mexico,
along with the creation of several jobs in Mexico, the article sustain the thesis that the effects
for Mexico remains controversial and a little bit contradictory.

McBride and Sergie point out that, despite the seemingly good consequences of the sign
of the Agreement, aftercomes like an less expressive growth rate of the Mexican economy in
comparison with other Latin American countries between 1993 and 2013, in addition to an
increasingly unemployment due to an unfair competition with heavily subsidized US
companies, plus specifically corn producers shows that NAFTA consequences are not only a
bed of roses for either countries.

Once again, strong migrations to its north American neighbor has been viewed as an
alarmingly effect of the liberalization of Mexican economy due to the treatise. An increasingly
disparity between Mexican South (agrarian) and North (industrialized) regions is, for the
authors another point of interest for the critics of the 1994 accord.

Neverthless, the article shows that there was other causes, unrelated to NAFTA, to the
recent Mexican economic performance, like the competition with China and intern policies
(devaluation of its currency and a not made yet land reform in the nation’s land. All these,
along with other domestic problems, has been decisive for the future of the country.

10
4th Document – (Video)
< https://www.youtube.com/watch?v=DwKR08t5BGA>
A video by “Quartz” YouTube channel

Summary
The video is an essay of demystification of certain prejudices that, principally, many
Americans have with the NAFTA accord. It begins showing the benefits that either the US and
Mexico have obtained with the free trade agreement in relation to the selling and buying of
avocados, one of the main Mexican imports to the US and a not so spoken branch of the
consequences of the treatise.
Before NAFTA being signed, the American market of avocados was based in its
production in the states of California and Florida, plantations heavily influenced by the season.
Therefore, at this time, Americans almost did not eat avocados, situation that have changed
with the allowing of Mexican avocados in the US market after the beginning of the accord.
This is just an example of several products that Mexico sell to the United States,
specially agrarian products, and attests to win-win consequences of the Agreement. However,
there are some markets that, for some special interests, NAFTA has not been only a bed of
roses.
One example shown in the video is the market of shoes. This market, before NAFTA,
in the US, was heavily subsidized, so, despite the cheaper labor force in Mexico, the United
States did not buy Mexican shoes like nowadays, with the open barriers for this market. This
has led to a moving of several manufactories from the country to its poorer neighbor, closing
a lot of industries in all the American territories and affecting also the jobs indirectly related
to the people that worked in these factories.
But, at the end, the document defends the idea that the majority of the benefits created
by NAFTA are generalized in the US and in Mexico and, in the other hand, the bad
consequences are, in most of the cases, just for particular group of interest.

11
Vocabulary list
• Bailout – A financial rescue, for example, of an enterprise.
• Dweller – Someone that inhabits an specific place.
• Jeopardy – Danger, peril.
• Sovereignty – We say that a nation is sovereign if it makes its own laws and control its
own resources independently of the others.
• Rule of law – The idea that says that there is no one above the law, that everybody must
follow its rules.
• To level the playing field – To bring to a situation where no one has advantage in
relation to the others.
• Public debt – Is a debt owned by a government, the total of all borrowing of a
government.
• Subsidized – Something that receives money of the government to support its activities.
• Devaluation – Loss of the value. In the case of a currency, normally due to a process
of inflation.
• Land reform – It is the process of reforming the laws, of changing the rules that dictate
land ownership in a territory.

12
Essay – “Has NAFTA been satisfactory for Mexico?”
By Mateus VASCONCELOS ALBUQUERQUE

Proposed firstly in Ronald Reagan’s 1980 campaign and signed in 1992 by American
President George H.W. Bush, Mexican President Salinas and Canadian Prime Minister Brian
Mulroney, the North American Free Trade Agreement, NAFTA, came into force in 1994. In
its 24th anniversary, the agreement has shown several controversial consequences for each of
the three involved nations, specially to the developing country of the block, Mexico.
With the purposes of granting the signatories most favored nation status, eliminating
barriers to trade and facilitating the cross-border movement of goods and services, promoting
conditions of fair competition, increasing investment opportunities, providing protection and
enforcement of intellectual property rights and creating procedures for the resolution of trade
disputes as well as stablishing a framework for further trilateral, regional, and multilateral
cooperation to expand the trade agreement's benefits, NAFTA has been created with a major
focus in the liberalization of trade in agriculture, textiles, and automobile manufacturing.
Mexico, developing country of the block, was the center of attentions of the other
countries, with a rapid integration of the country with the highly developed, high-wage
economies of the United States and Canada being an attended goal. The hope was that freer
trade would bring stronger and steadier economic growth to Mexico, providing new jobs and
opportunities for its growing workforce and discouraging illegal migration from its territory.
In the first years of the accord being signed, Mexico had already modernized and
liberalized one of the most protectionists economies of Latin America. With measures like the
reduction of public debt, the introduction of a balanced budget rule, the stabilization of
inflation, and the building up of the nation’s foreign reserves, the country appeared to, finally,
have implanted the “rule of law”, at least at the economy, in a nation always governed by
arbitrary autocratic governments since the sign of NAFTA.
Despite the liberalization of Mexican economy due to the accord having tripled the
country’s farm exports to the US, the harder access to credit for national enterprises, a direct
consequence of the selling of several Mexican banks to multinational American and Canadian
companies, along with the unfair competition with the highly subsidized and protected
competitors in agricultural sectors, specially the corn production, of these nations has led to
the bankruptcy of countless little and medium farmers in Mexico. This fact has led
approximately two million Mexicans that worked in this area unemployed, with an
unemployment rate that has diminished at the very beginning (until 1997) but after has
increased, attaining a peak of 6.42 in 2009.
This unemployment rates have accentuated, beside the still present disparities along the
Mexican-US border between the two countries, a migration pressure from Mexico to the US,

13
mostly of it illegal, process that have more than doubled from 1990 to 2000. This has been
contrarily to the maxima of Carlos Salinas de Gortiari, ancient president of the Latin country:
“Mexico will export goods, not people.” and the original goals of NAFTA, one of these being
the economic independence of Mexico and a reduction of the emigration from this nation.
The fall of several Mexican little corn enterprises has not been the only factor of the
increase of migration, others being the 1994-1995 peso crisis and the absence of the promised
investments in infrastructure by the part of Mexican government. However, it has been a cause
of many conflicts between the US and the country, with many of Mexican immigrants related
to illegal services in the United States, like traffic of drugs or informal trade activities, fact that
has led to many aggressive and sometime offensive postures of US politicians against Mexico.
From an industrial point of view, the accord has boosted the Mexican automobile
production sector, with the creation of several jobs in this activity domain, along with an
explosion of Maquiladoras in the US-Mexican borders, factories which import components
and assemble it into finished products for exportation. This rapid industrial development has
led to an increasingly disparity between Mexican North, industrial and counting with a foreign
investment based high tech manufacturing and South, agrarian, with an economy based in
commodities.
The country has become a car manufacturing hub, but at the expense of who? The
conditions of living in the big Mexican cities along with the real wages in the Maquiladoras of
the automobile and fabric sectors prove that the rich and small middle class of Mexico have
been the principal beneficiary of most of the economic benefits of the agreement with, for
example, the growth of a small, educated middle class in the country. The impoverished
Mexico’s countryside, in the other hand, migrated to Mexican big cities and this increasingly
cheap workforce in these places has been one of the causes of the low-level wages in the
industrial segment and the maquiladoras became hubs of labor rights violations and bad
conditions for its workers.
Mexico’s government, in its turn, had no reason to improve the conditions of working
in the cities, because doing so would cause a discouragement of foreign companies to install
their industrial sites in the country, fact that would bring a loss of government revenues.
However, NAFTA was not supposed to cause all the condition of working in Mexico, seeing
that the three nations also signed the North American Agreement on Labor Cooperation
(NAALC), with the goal of promoting labor rights for the participants of the bloc.
Mexico’s poverty, an important index of the advance of a developing country, remains
almost the same as in 1994, with a very little increase in real wage indicators alongside an
increasingly wage disparity between it and its developed neighbors. The nation has grown less
than earlier in the 20th century (1% per capita after NAFTA against 3.2% entre 1948 and 1973)
and has grown less than many other Latin America countries and the income gap between
Mexico and its NAFTA partners (Canada and US) has increased.

14
 We can conclude that NAFTA has been very controversial to Mexican economy.
Despite the effects of organizing the economic system in the country, fomenting important
measures to implement the “rule of law” in the country, the Agreement has also brought some
inconvenient consequences to the society of this country. However, getting out of the free trade
accord would be, for the Latin country, as traumatic as it was its entry.

15
Bibliography
• “The broken promise of NAFTA”
< https://www.nytimes.com/2004/01/06/opinion/the-broken-promise-of-nafta.html>
• “NAFTA’s Winners and Losers”
<https://www.investopedia.com/articles/economics/08/north-american-free-trade-
agreement.asp>
• “Misery in the Maquiladoras”
< http://hir.harvard.edu/article/?a=14424>
• “NAFTA’s economic benefits are manifold”
<https://www.economy.com/dismal/analysis/commentary/296503/NAFTAs-
Economic-Benefits-Are-Manifold/>
• “NAFTA’s economic impact”
<https://www.cfr.org/backgrounder/naftas-economic-impact>
• “NAFTA and the Sangri-La of the Rule of Law”
<https://www.revistadelauniversidad.mx/articles/8be59020-1574-4f09-b6ee-
6d101137fa8d/nafta-and-the-shangri-la-of-the-rule-of-law>

16