The leaders of Canada, Mexico, and the United States signed the North American Free Trade Agreement (NAFTA) on October 7, 1992. It came into effect on January 1, 1994. NAFTA calls for the lifting of trade barriers among the signatories over a 15-year time period. The treaty covered agreements on trade relations, labor relations, and environmental policy.
The three nations enjoyed strong trade relations before NAFTA went into effect. Nevertheless, the United States debated NAFTA’s impact on labor and pollution extensively. People employed in manufacturing feared they would lose their jobs to the extremely cheap labor in Mexico. Labor unions in the United States spoke out often on the subject, fearing job losses as American companies relocated in Mexico. Critics cite the transformation of the maquiladoras area just over the U. S. border as an example of the negative impact of NAFTA. Deriving from the Spanish word maqui-lar, meaning to perform a task for another, the term refers to foreign-owned businesses located across the U. S. border in Mexico. The maquiladoras region includes the cities of Mexicali, Tijuana, and Ciudad Juarez, areas plagued with pollution problems, which many fear will worsen as more manufacturing moves into this area. Others criticized NAFTA because Mexico’s environmental laws were lax and poorly enforced. Concerns over loss of American jobs, poor work conditions in Mexico, and environmental pollution kept Congress from voting on the treaty for more than a year before it was ratified.
The effects of NAFTA vary widely, but Mexico has seen the greatest impact. Proponents stress that impoverished Mexican cities have benefited greatly from the agreement. Ciudad Juarez has gained more than $4 billion in foreign investment and 150,000 manufacturing jobs since NAFTA went into effect. In contrast, a 1999 Labor University of Mexico study stated that, in the previous five years, the purchasing power of Mexican workers declined significantly. The study also describes increases in unemployment in the agricultural and small business sectors.
The effects of NAFTA on the American economy have been mixed. NAFTA has helped promote trade with
Mexico and, in doing so, has improved the United States’s relations with its southern neighbor. At the same time, American corporations have moved assembling plants to Mexico to avoid higher labor cost in the United States. Furthermore, critics charge that NAFTA has allowed increased access by drug smugglers to the United States through the increased traffic from Mexico entering the country. Finally, many critics charge that environmental and labor problems in Mexico have still not been addressed.
NAFTA and the Central American Free Trade Agreement (CAFTA) became a major campaign issue in the Democratic presidential primary race when Barack Hussein Obama declared in a debate in February 2008 that he would renegotiate NAFTA to ensure that environmental and fair labor laws were instituted by countries participating in these treaties. This reflected his earlier opposition to CAFTA that came before the Senate in 2007. He declared at that time that “I think that NAFTA and CAFTA did not reflect the interests of American workers but reflected the interests of the stock owners on Wall Street, because they did not contain the sorts of labor provisions and environmental provisions that should have been embedded and should have been enforceable in those agreements.” After he won the Democratic Party nomination, he tempered his strong opposition to these treaties.
See also foreign policy; globalization; World Trade Organization.
Further reading: U. S. Congress. Senate Committee on Foreign Relations, Subcommittee on Western Hemisphere, Lessons for NAFTA for U. S. Relations with the Americas (Washington, D. C.: U. S. Government Printing Office, 2000).
—Leah Blakey and Michele Rutledge
World History
