Delphi, in 2003, employed 70,000 Mexicans at its Ciudad Juarez plant. The company saves by paying an assemblyline worker with considerable experience a little less than $2. The worker, however, is delighted to get the job because that’s around thrice Mexico’s minimum wage, plus the good environment and colleagues. This scenario was made possible by the North American Free Trade Agreement (Was NAFTA Worth.
.. 2003).NAFTA is a trade bloc in North America that started on January 1, 1994. The Agreement removed most trade barriers among Canada, the United States, and Mexico (Foreign Agricultural Service, undated).
Businessweek has called the North American Free Trade Agreement as “one of the most radical free trade experiments in history” and ranks it at par with the Euro (Was NAFTA Worth… 2003).Mexico’s Secretary of Economy Luis Ernesto Derbez points out that NAFTA helped consolidate Mexico’s position as the U.S.’s second largest trading partner, saying that in 2001, bilateral trade between the U.S.
and Mexico was more than $245 billion, a 188% increase from 1993 (Derbez, undated).Derbez adds that Mexico has seen the same rise in trade with Canada. Derbez also touts the “great advantage” of NAFTA, which could be seen in the creation of more jobs and economic growth.
NAFTA, according to Derbez, has put Mexico in the same league as the U.S. and Canada, thereby increasing its attractiveness, which is fueled by its abundant young skilled labor force with “a proven ability” to acquire new production processes.;Businessweek agrees, calling the experiment a “smashing success on many levels.” A March 2008 release from the United States Trade Representative states that from 1993 to 2007, trade among Mexico, the U.S.
and Canada has more than tripled to $930 billion (Was NAFTA Worth… 2003).
Businessweek also says that NAFTA spurred political change with the Mexican’s shift in attitude towards open markets also influenced its vote for democracy. The World Bank agrees, as it published a draft report saying that NAFTA has given significant economic and social benefits to Mexico and its economy, saying that the country would have had a hard time overcoming difficulties it faced during the financial crisis in the mid-90s.There is another side to the coin, though. Celia Dugger at the New York Times reported that NAFTA failed to generate substantial job growth for Mexicans. Dugger, citing a Carnegie Endowment for International Peace study, said that real wages in Mexico are lower in 2003 than before NAFTA was adopted, despite higher productivity (Dugger, 2003).The U.S. Trade Representative, however, disputes the claim, saying that Mexican wages has grown steadily since 1997, adding that Mexican exporters or companies located in areas of higher foreign investment and trade have higher wages (Office of the Trade Representative, 2008).
Dugger also said that small Mexican farmers were hurt due to the rapidly falling prices of their crops. NAFTA, also brought with it environmental damage (Dugger, 2003).The arguments continue whether NAFTA was a good idea or not, from the day it was implemented to its 10th anniversary, to as recent as November 2007 when Sen. Hillary Clinton called it a “mistake”, economic policies and agreements will always have proponents and critics.
One thing is clear, the Mexican experience with NAFTA has mostly proven positive, opening its economy to the world, giving its citizens jobs that paid higher that how they were being paid in the first place. Numbers and statistics won’t lie: Mexico has seen better times with NAFTA. It may have its disadvantages—rising unemployment in the U.S., jobless farmers, among other things—but a bird’s eye view on its benefits would definitely overshadow that. References Derbez, Luis Ernesto.
Mexico and the Free Trade Area of the Americas. Retrieved on 11 April2008. <http://usinfo.state.gov/journals/ites/1002/ijee/ftaa-derbez.
htm> Dugger, Celia. (2003). Report Finds Few Benefits for Mexico in Nafta. New York Times.Retrieved on 11 April 2008. <http://query.nytimes.
com/gst/fullpage.html?res=9D02E3D71F38F93AA25752C1A9659C8B63> Mexico: Was NAFTA Worth It? (2003). BusinessWeek. Retrieved on 11 April 2008.<http://www.businessweek.
com/magazine/content/03_51/b3863008.htm> NAFTA Facts. Office of the United States Trade Representative. Retrieved on 11 April 2008.<http://www.ustr.gov/assets/Document_Library/Fact_Sheets/2008/asset_upload_file855_14540.
pdf> North American Free Trade Agreement. Foreign Agricultural Service. Retrieved on 11 April2008.