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NAFTA effect on Mexico PRESENTED BY SATOSHI SUZUKI ARATO IWASAWA North American Free Trade Agreement Free trade agreement signed by the United States, Canada, and Mexico Effect on 1 January 1994 Population: 370,000,000 GDP: $6,500 billion Goals To remove all trade barriers To promote fair competition Expansion of investment opportunity Phasing out tariff NAFTA are gradually phasing out tariff In 1994, 84% of all Mexican goods exported to the US were removed their tariff Mexico ->US US ->Mexico abolition Abolition in 1994 in 1998 84% 8% abolition abolition in 2003 in 2008 7% 1% 43% 38% 18% 1% Effect on Mexico Increase 500,000 employments in manufacturing industry , but 1,300,000 unemployment in agricultural industry Mexican government estimates there has been $3.6 billion economic loss by environmental pollution Increase illegal immigrants from Mexico to the US Reasons for unemployment in Mexico Import of corn from the US has been increasing since 1994 Price of the US corn is cheaper than the price of Mexican corn Because of increasing corn import from the US, price of corn in Mexico has decreased from $220 per 1,000 kg in 1992 to $160 in 1995 Corn import in Mexico imported corn( million kg) 7000 6000 5000 4000 import 3000 2000 1000 0 import 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2100 3054 5946 6349 2595 5277 5096 5179 5655 5337 environmental pollution by NAFTA To compete with the US crops, Mexican farms Shift their systems into rationalization Overuse agricultural chemicals, such as nitrogen and phosphorus Nitrogen becomes a main pollutant of the Gulf of Mexico Mexican government estimates there has been $3.6 billion economic loss per year by environmental pollution Conclusion Benefit GDP per person has increased from $3,000 in 1994 to $6,100 in 2002 Rationalization of Mexican Farms Loss environmental pollution and $3.6 billion loss per year Huge unemployment on agricultural industry