North American Free Trade Agreement.


The NAFTA agreement helped the three countries increased the amount of trade activity among themselves. “Trade between the NAFTA signatories tripled, from $297 billion in 1993 to $1 trillion in 2007” (Amadeo, 2011).

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One of the industries in the United States that benefited the most from the agreement was the farming industry due to the fact that Mexico used to have extremely high tariffs on agricultural products. Some of the crops that have increased in demand for exporting in the United States include beef, rice, soybeans and beans. The NAFTA agreement created the biggest free trade area in the world connecting three economies that generated over $17 trillion annually (Amadeo, 2011). The service industry received a major boost in demand since NAFTA was signed. Some of the industries that have benefited from the agreement are healthcare and financial services. The prices of food have reduced as a consequence of the NAFTA agreement. Another benefit that Canada and Mexico received from the agreement was an increase in foreign direct investment (FDI) from the United States. The volume of foreign direct investment has more than tripled since the inception of the agreement.

Despite a lot of the advantages of NAFTA the agreement also had some negative aspects. In the United States the manufacturing industry was negatively impacted as job creation in manufacturing became stagnant. The cheaper Mexican labor became an attractive proposition for many American investors. The United States has one of the highest labor costs in the world. Another negative aspect of the agreement was movement of criminals across the borders. The drug trade and the cartels in Mexico gained power due to the facility of movement of people and drug across the borders. Some sectors of the agricultural economy of Mexico have been negatively impacted by the imports of vegetables and fruits from Canada and the United States.

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