Download A Pre-NAFTA Assessment

NS3040
Fall Term 2015
Pre-NAFTA Assessment
NAFTA Cost/Benefits U.S. I
• Stephen Stamos, Reflections on the Proposed U.S.Mexico Free Trade Agreement, 1993
U.S. Perspective
• Positive aspects
• U.S. firms have better access to cheaper labor/parts
• Increased access to growing export markets
• Liberalized foreign investment laws in Mexico
• Expansion of financial and services sectors to México
• Mexico becomes a very reliable sure of petroleum
• Enhance Mexico’s political stability
• Overall a net employment gain
• Increase the competitiveness of U.S. firms
• Assist U.S. banks in resolving Mexico’s debt service
• Ease immigration pressures
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NAFTA Cost/Benefits U.S. II
U.S. Perspective
• Negative Aspects
• Employment loss in select industries and regions
• Forced restructuring in sectors like agriculture
• Downward pressure on U.S. wages/standard of living
• Increased competition for small-medium sized firms
• Uneven regional impact
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NAFTA Cost/Benefits Mexico I
Free Trade for Mexico
• Positive aspects
• Increased direct private foreign investment
• Repatriation of “flight capital.”
• Increased economic growth
• Increased Export Growth
• Increased diversification of the economy
• Increased employment and Income
• Increased expansion of the internal market
• Promote a more modern and open economy
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NAFTA Cost Benefits Mexico II
Free Trade for Mexico
• Negative Aspects
• Increased integration with the U.S. Economy – increased
vulnerability
• Worker and community Issues: health, safety and the
environment
• Child labor laws and regulations
• The adjustment realities for Mexican firms
• The changing structure, composition and composition of
production in Mexico
• Uneven regional economic impact – Northern border versus
other areas
• A challenge to Mexico’s historic nationalism
• Compromises future policy options in terms of the external debt
situation
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NAFTA Cost Benefits Mexico III
• Real Questions for Mexico
• Re-examination of the positives
• Will capital flight return?
• Will wages (real income) increase?
• Will domestic markets expand?
• Will the pace of immigration slow?
• Will foreign investment flow significantly to where it is needed?
• What will be the character of a more open and modern economy
that is driven by export-led growth?
• Will the lost standard of living of the 1980s be regained for those
who lost it?
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NAFTA Cost Benefits Mexico IV
The Real Questions for Mexico
• A Re-examination of the negatives
• Will the negatives be even worse than imagined?
• What kind of protections can be built into the agreement to
seriously address genuine negatives
• Final Thoughts
• NAFTA obviously inevitable
• When U.S. economy strong the positive economic influences will
be more self evident, especially in the Northern border states
• While economic benefits for parts of Mexico obvious, for Salinas
NAFTA a essential part of his neoliberal reforms to bring Mexico
into the global economy.
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