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The North American Free Trade Agreement (or NAFTA) is a treaty that facilitates free trade between its signatory nations Canada, The United States, and Mexico. When signed in 1994 it was heralded as a way to bring greater economic prosperity to all three nations involved in the agreement by way of eliminating tariffs on trade and other encumbrances to trade between the three nations. For the purposes of this policy discussion we will focus on the relationship between the U.S. and Mexico within the wider North American free trade zone.
The idea behind NAFTA, as it pertains to the U.S. and Mexico, is that with the elimination of trade barriers between the two nations (amongst other stipulations of the agreement), Mexico’s economy would benefit from increased trade with the U.S. and that the U.S. economy would benefit from cheaper imported products.
Maquiladora’s established on the Mexican side of the U.S./Mexico border import, duty free, machinery, equipment and primary goods from the U.S., produce secondary goods and then export these secondary goods back to the U.S. This, in theory was to increase employment on the Mexican side of the U.S./Mexico border region while providing U.S. consumers with cheaper products because of the cheaper labor used to produce said products.
Indeed trade did increase. According to Gretel C. Kovach of The New York Times (citing the U.S. Chamber of Commerce), there was $81 billion in trade between the U.S. and Mexico in 1993, while that number ballooned to $332 billion in 2006 (Kavach).
Although NAFTA opened up U.S. borders to Mexican exports, it also opened up Mexican borders to U.S. exports. U.S. agricultural exports would explode onto the Mexican market. The United States subsidizes a litany of different agricultural commodities, and as such these commodities are more competitive than their Mexican counterparts. This has had the effect of driving small Mexican farmers from rural areas into cities because they simply can not