Over the past forty years, Mexico has undergone a dramatic transition from a relatively closed economy to one of the most open countries in the world. This process began with Mexico`s accession to THE GATT in 1986 and continued with the signing of free trade agreements with 32 countries, including the North American Free Trade Agreement (NAFTA) in 1994. Initially, IMMEX encouraged manufacturers to export goods and strengthen Mexican exports, and this growth continued. In just over a decade, the program has resulted in a 99% increase in export trade from $210 billion in 2005 to $419 billion in 2017. Mexico is now one of the world`s leading trading nations. According to the World Trade Organization, Mexico became the eighth largest exporter and seventh largest importer in the world in 2003, with a merchandise trade of $344.3 billion. See figure below: NAFTA also marked the dawn of a new era of free trade agreements, which have extended to the stagnation of World Trade Organization (WTO) global trade negotiations, and has played a pioneering role in integrating labour and environmental provisions, which have become increasingly broad in subsequent free trade agreements [PDF]. The USMCA has put in place stricter enforcement mechanisms than the original agreement, which has led the AFL-CIO, the largest collection of U.S. unions, to support the pact – a rare endorsement from a group that has strongly criticized NAFTA.
In addition, many economists argue that recent U.S. production problems have little to do with NAFTA and say that domestic production was under pressure decades before the contract. Surveys by David Autor, David Dorn and Gordon Hanson, published in 2016 [PDF], have shown that competition with China since 2001, when China joined the WTO, has had a much greater negative impact on U.S. employment. Hanson, an economist and trade expert at the University of California, San Diego (UCSD), says the biggest decline in manufacturing employment – between 17 million and 11 million between 2000 and 2010 – is mainly due to trade with China and underlying technological changes. “China is at the top of the list in terms of the impact on employment that we have seen since 2000, with technology being second and NAFTA much less important,” he says. The North American Free Trade Agreement (NAFTA) was a three-country agreement negotiated by the governments of Canada, Mexico and the United States, which came into force in January 1994. NAFTA eliminated most tariffs on goods traded between the three countries, with a focus on trade liberalization in agriculture, textiles and automobiles.
The agreement also aimed to protect intellectual property, establish dispute resolution mechanisms and implement labour and environmental protection measures through ancillary agreements. Under the agreement, Canada agreed to provide increased access to its dairy market and obtained several concessions in exchange. The USMCA will retain Chapter 19, which Canada relies on to protect it from U.S. trade assistance. It has also avoided a proposed five-year expiration clause, but uses a 16-year delay with a review after six years. In the end, according to many experts, Mexico`s recent economic performance was influenced by non-NAFTA factors. The depreciation of the peso in 1994 stimulated Mexican exports, while competition with low-priced Chinese industry [PDF] likely slowed growth. Non-coherent public measures, such as land reform, have facilitated the sale and emigration of farmers. Hanson of UCSD argued [PDF] that Mexico`s struggles are mainly due to domestic causes: underdeveloped credit markets, a large and low-productivity informal sector and dysfunctional regulation.