Which Is A Major Concern For Mexico Under The North American Free Trade Agreement

Most economists argue that trade liberalization promotes overall economic growth and the efficiency of trading partners, although there are short-term adjustment costs. NAFTA was unusual globally because it was the first time that a free trade agreement involved two prosperous and developed countries with a low-income developing country. That is why the agreement has received a great deal of attention from U.S. politicians, manufacturers, service providers, land producers, unions, non-governmental organizations and academics. Supporters argued that the agreement would help create thousands of jobs and reduce income gaps between Mexico and its northern neighbors. Opponents warned that the deal would lead to huge job losses in the United States, because companies were relocating production to Mexico to reduce costs.39 According to a World Bank study, NAFTA has brought economic and social benefits to the Mexican economy, but that it is not enough to reduce inequality in economic conditions between Mexico and the United States.73 Innovation and infrastructure as well as the quality of national institutions. The study also finds that income convergence between a Latin American country and the United States is limited by large differences in the quality of national institutions, in the innovation dynamics of domestic firms and in the skills of the workforce. While NAFTA has had a positive impact on wages and employment in some Mexican states, the domestic pay gap has widened as a result of trade liberalization.74 Another study finds that Mexico`s ability to improve economic conditions depends on its ability to improve its domestic institutions, adding that since NAFTA came into force. , Mexican institutions have not improved significantly compared to other Latin American countries.75 Free trade is expected to reduce the long-term labour gap between the United States and Canada. Open competition has been forced by Canadian industry to be more productive. Since NAFTA, this gap could be reduced to the low value of the Canadian dollar.

Because the addition of capital equipment (often purchased in the United States) was relatively more expensive than hiring additional labour, it was often used. The appreciation of the Canadian dollar has made additional capitalization more attractive, but labour productivity has remained only 72% of the U.S. level. 80 The relatively low level of productivity of Canadian industry, relatively low investment in research and development and relatively lower spending on information technology are seen as a threat to Canada`s long-term competitiveness. This is still a concern for Canadian politicians, although Canada leads the Organization for Economic Co-operation and Development (OECD) ranking in the post-secondary population.81 Partly because of these disabilities, the United States, Mexico and Canada began renegotiating NAFTA on September 30, 2018. Negotiations between the three countries ended on 30 November 2018. The new agreement is called The Agreement between the United States, Mexico-Canada. The U.S. Congress ended the agreement on January 16, 2020, and two weeks later, Donald Trumped signed the agreement. Mexico ratified the agreement in 2019.

It must be ratified by the legislative branch of each country before it enters into force. Currently, the United States and Mexico are waiting for Canda to ratify the agreement. Since NAFTA was adopted, U.S. trade interests have often expressed very satisfaction with the agreement. Trade between the three NAFTA nations has grown strongly, but this increase in trade activity has led to growing trade deficits for the United States.

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