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NAFTA and Mexico

North American Free Trade Agreement (NAFTA) 

Mexico has changed a lot in since NAFTA was implemented in 1994.Trade with the U.S. and Canada has tripled since the implementation of NAFTA in 1994. Mexico has 12 free trade agreements with over 40 countries including Guatemala, Honduras, El Salvador, the European Free Trade Area, and Japan, putting more than 90% of trade under free trade agreements.

The following information comes from the Office of the United States Trade Representative, March 2008

From 1993 to 2007, trade among the NAFTA nations more than tripled, from $297 billion to $930 billion. Business investment in the United States has risen by 117 percent since 1993, compared to a 45 percent increase between 1979 and 1993.

U.S. employment rose from 110.8 million people in 1993 to 137.6 million in 2007, an increase of 24 percent. The average unemployment rate was 5.1 percent in the period 1994-2007, compared to 7.1 percent during the period 1980-1993.

U.S. manufacturing output rose by 58 percent between 1993 and 2006, as compared to 42 percent between 1980 and 1993. Manufacturing exports in 2007 reached an all time high with a value of $982 billion.

U.S. business sector real hourly compensation rose by 1.3 percent each year between 1993 and 2007, for a total of 19.3 percent over the full period. During 1979-1993, the annual rate of Erika-Torres,-Multivalores, talks about Investments & the Economy of Mexicoreal hourly compensation rose by 0.8 percent each year, or 11 percent over the full 14-year period.

Mexican wages grew steadily after the 1994 peso crisis, reached pre-crisis levels in 1997; and have increased each year since. Several studies note that Mexican industries that export or that are in regions with a higher concentration of foreign investment and trade also have higher wages.

The government is cognizant of the need to upgrade infrastructure, modernize the tax system and labor laws, and provide incentives to invest in the energy sector, but progress is slow.

However, progress has been made and macroeconomic stability has been preserved. Mexico now boasts:

* Interest rates at historically low levels
* Inflation remains low and stable
* The external accounts are in order
* Excellent access to international capital markets
* Much improved fiscal discipline
* A much improved structure and maturity of public debt
* A stronger legal framework in the financial system
* Economic and financial integration in North America

There are still challenges ahead for Mexico to increase the pace of economic growth and preserve its economic stability, especially with the growing competition from China (Mexico is not alone on this front).

During our conferences you’ll hear from one of our experts about the Mexican economy and the current political situation in Mexico, which by the way is extremely positive at the moment. In the election year 2000, the opposition party was successful in getting in. This is the first time in 71 years that a different party than the PRI was able to get elected. The same party stayed in power after the elections of 2006. Finally Mexico is experiencing true democracy. This bodes well for the future of Mexico. People are feeling more and more confident about Mexico’s growing economy every year.

EXECUTIVE SUMMARY 

"NAFTA: Five Years Linking U.S. and Mexican Markets" focused on the successes, strategies and challenges of North American companies during the trade agreement's implementation. 

The successes are impossible to ignore. U.S.- Mexico trade increased 113 percent from 1993, the year before NAFTA implementation began, through the end of 1998. Mexico has become the second-largest trading partner for the United States, surpassing Japan, and Mexico is the second-largest market for U.S. goods in the world. Canada is the United States largest trading partner. The results have paid off for North American corporations, workers and consumers as companies find a dynamic market for exports, as wages increase and unemployment falls, and as the cost of goods decreases while quality increases.

Graph showing Mexico TradeCorporate strategy has varied sector by sector. The conference high-lighted how Mexican companies have been able to source materials in the United States ¾ rather than Asia or Europe ¾ because NAFTA makes U.S. products more competitive. In agriculture, U.S. farmers have been able to tap Mexico's strong demand for agro-industrial products, such as corn and livestock, while Mexico has had great success selling fresh vegetables and fruits to demanding U.S. consumers. Universities explained how they are preparing a North American workforce to compete with the rest of the world. U.S. and Mexican companies have helped to clean up North America's environment and fill a gap in health care needs. NAFTA has allowed manufacturers to rationalize operations for greater efficiency. Telecommunications firms have aggressively expanded in the Mexican market, realizing the benefits of deregulations and utilizing new technology to pursue the huge potential of the North American market. Transportation experts outline logistics, security and safety issues related to moving products across international borders.

While reflecting on the success of NAFTA, this conference also outlined challenges for the future. NAFTA is only one-third of the way through its implementation process and some portions of the agreement have already been snagged by non-trade considerations. North America's relationship with the rest of the Western Hemisphere, Europe and Asia is also crucial to the future of North America's firms, workers and consumers. NAFTA does not exist in a vacuum -- business leaders must consider the next steps for trade relations with the rest of the world.

The U.S.- Mexico Chamber of Commerce presents the following proceedings, representing the insight and experience of leading industry and government officials, to explain one of the most fruitful trade relationships in the world.

You'll find out a lot more and the most up-to-date information when you listen to our Expert Speaker, Erika Torres of MultiValores, talk about where Mexico has been and where it's going and how YOU can benefit! It's an eye-opening experience.


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