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NAFTA at Ten: Unfulfilled Promises in Mexico


Code : ITW0034B

Year :

Industry : International trade

Region : :Mexico

Teaching Note:Not Available

Structured Assignment : Available

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About Mexico The United Mexican States or Mexico, in North America, was the most populous Spanishspeaking country in the world. It was divided into 31 states and a Federal District. Each state had its own constitution and a governor and the representatives were elected to the state congress. The Federal District was a special political division whose rules were different from the states. The national capital, Mexico City was also located in this District...

Industry and Economy Mexico’s mixed economy included agriculture, manufacturing, and the extraction of petroleum and natural gas (Annexure III). Mexico’s major crops were corn, rice, wheat, beans, coffee, fruits and vegetables. It was also one of the largest producers of silver, bismuth, and celestite. Mexico manufactured a variety of processed foods, chemicals, transport vehicles and electrical machinery. Private sector was more dominant and even had its presence in railroads, seaports, telecommunications, electricity, natural gas distribution and airports...

The North American Free Trade Agreement (NAFTA) In the early 1990s, Mexican economy entered into a new phase of growth through various free trade agreements17, the foremost being NAFTA. The North American Free Trade Agreement (NAFTA) was signed in 1992 by the United States, Canada and Mexico, and was implemented on January 1, 1994. The agreement aimed at removing barriers to trade and investment among the three countries (Exhibit II). NAFTA provided a rule-based framework for expanding the scope of business relations among the countries of North America. Under NAFTA, most of the tariffs were eliminated, while the remaining was scheduled to be gradually eliminated over a period of 15 years (Annexure V). By 2008, all agricultural tariffs18 and tariff rate quotas19 were expected to be completely phased out...

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Effects of NAFTA on Mexico The positive and negative implications of NAFTA were debated right from the time NAFTA was proposed. It continued throughout its implementation and even after a decade of its existence. The treaty remained controversial, especially in Mexico. Though NAFTA transformed Mexican economy by increasing exports and foreign direct investment, it was argued that NAFTA failed to meet the economic, environmental and social objectives of Mexico...

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