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Essay Subject: Examines benefits & dangers of the North American Free Trade Agreement (NAFTA) for the US & Mexico. Looks at Congressional press for changes during President Clinton's first term.... More...

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Paper Abstract: Examines benefits & dangers of the North American Free Trade Agreement (NAFTA) for the US & Mexico. Looks at Congressional press for changes during President Clinton's first term. Paper Introduction: The tripartite free trade agreement between the US, Canada and Mexico is known as the North American Free Trade Agreement (NAFTA). The provisions of NAFTA addresses tariffs and benefits to U.S. consumers, producers and workers. Rules of origin ensures that only North American goods benefit from tax shelters. NAFTA disposes of investment barriers for each of the member countries and mandates equal opportunities to enable businesses to be competitive. Opposition to NAFTA, however, has been increasing in the U.S. because of fears that the treaty will cost the country a lot of jobs and that environmental standards will be ignored reverberate through Congress. Studies seem to indicate that these concerns are not justified. President Carlos Salinas of Mexico has treated NAFTA as a major element in his development policy and as a way to "lock in" the national, rural, and urban elements of Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. Salinasand his team have had a clarity of purpose seen in their implementation ofa radical economic reform program that has privatized more than a thousandgovernment-owned companies and opened Mexico's long-sheltered economy tofierce foreign competition. firms to do so (Driscoll, 1992, pp. When necessary, he has used force, as in May of 199 when he ordered the police to take the Veracruz port away from a PRI-affiliated labor mafia (Robinson, pp. billion and $ .6 billion,respectively, or 7.5 percent of total foreign direct investment in theUnited States. capital outflows. BibliographyA glance at the clock: free trade. At the present time,Mexico can review all investment proposals to determine if they are in thenational interest. . Thepeople "know that the government that is delivering on its promises camefrom a certain political party," he says, but there are no guarantees: While Salinas is now winning battles, says economist Rogelio Ramirez de la O, he is also changing the country's political equation: Economic change releases new forces that cannot be co-opted." And even Salinas's friend Hector Aguilar Camin, editor of the prestigious monthly Nexos, predicts that Mexican voters will eventually start demanding political deregulation as well: "People won't understand why they can choose among five brands of cereal but can't choose their own government" (Robinson, p. the more internationally integrated financial markets become, the harder it is to induce domestic capitalists to make long-term fixed investments. He has already had to abandonMexico's insular protectionist stance because it is to Mexico's advantageto do so. At the present time, the United States is the largest foreigninvestor in both Canada and Mexico, with direct investment of $68.5 billionand $11.6 billion, respectively, in 1991. He has made a number of changes both in his administrationand in domestic environmental policy to allay the fears of Congress andAmerican environmentalists. 6-7). NAFTA removes investment barriers, provides fair treatmentof investors and eliminates government requirements that distort businessdecisions. 38-4 .----------------------- 4 As it is presentlywritten, the treaty would radically lower barriers to trade in goods andservices between the three countries (The United States, Mexico, andCanada). . 215-236).Robinson, L. Rules of origin ensures that only North Americangoods benefit from tax shelters. For a free-trade agreement to deliver the promised benefits, though,Salinas still needs to triumph over inefficiency, corruption, and politicalresistance from the entrenched interests inside his own InstitutionalRevolutionary Party (PRI). Now, President Carlos Salinas de Gortari is reversingthat history and reputation with considerable success. Trade economists feltthat some of the proposals Mr. Clinton has supported could not benegotiated without reopening the agree-ment. 28-29.After NAFTA. 71). His interest is in engendering trade, not in gainingadvantage in other ways ("A glance at the clock: Free trade," pp. Key provisions of the North American Free Trade Agreement. demand in bilateral trade negotiations, andthis is a move that will restore confidence in the PRI's respect forprivate property but that will also alienate small and medium-sizedentrepreneurs. As the threat of exit becomes more credible and the potential damage greater, policymakers must pay more heed to the voice of capital if they expect to gain its loyalty - in the form of long-term industrial investment (p. 38). NAFTA gives U.S. The NAFTA agreement has been made centralfor a number of reasons to be discussed below, and the treaty willcertainly have an effect on the political culture and politicalinstitutions of Mexico if it is accepted by both sides. ("A glance at the clock: free trade," 1993, p. Mexico's new revolution: President Salinas uses free enterprise to drive his country into the modern age. On the other hand, manyAmericans have shown hostility to the agreement (including most recentlyRoss Perot), arguing that NAFTA's economic benefits will come at anunacceptable cost to the environment and to American jobs. Studies seem to indicate that these concernsare not justified. In 1991, the firstthree of the nationalized banks were sold at auction for two to three timesbook value. Salinas also had the aid of the Bush administration, whichfought in Congress to secure the authority for negotiating a free-tradeagreement. Since taking office in late 1988, Salinas and his team havedone a lot to make needed changes in Mexican society and politics. And that is just the start. More changes will be required. (1991, July 8). A. International economic opening and government-business relations. In the present climate, Congress is suspicious ofthe agreement, and it is thought that Congress is likely to pass it only ifPresident Clinton honors his electoral pledge to extend the agreement thatGeorge Bush reached with Mexico and Canada last summer. Theprovisions of NAFTA addresses tariffs and benefits to U.S. companies the right to establish firmsin Mexico and Canada or acquire existing firms, but it does not encourageU.S. . Maxfield (199 ) notes some of the problems facing Mexico in the nearfuture when she indicates that Mexico's political future depends to a greatextent on the country's national economic performance and the individualeconomic well-being of its citizens. Salinas will have to make numerous changes in the existing politicalculture, including opening the system to real competition in spite of hisdesire to promote the interests of the PRI. Mexican workers receive low wages partly because they aredeprived of rights they would have in the U.S. 29)Salinas has not been willing to leave the matter entirely to Clinton onsocial issues, either. (1992, October 19). Improving the climate for foreigninvestors has long been a U.S. However, as Maxfield writes, . Canadian and Mexican directinvestment in the United States in 1991 was $3 . . . Harsh medicine is whatmany believe is needed, and Salinas came to office knowing that economicreform would not be popular. In the mostrecent round of negotiations in March, Mexico and Canada, both conscious ofthe principle of sovereignty and both facing elections soon, showed adesire to minimize any amendments to last year's treaty. More has to be done to solidify these changes: "A free-trade accord with the United States and Canada, Salinas believes, will bethe jewel in his crown" (Robinson, 1991, p. Mexico's economic crash earned thecountry a reputation for economic mismanagement while raising fears ofsocial upheaval. In W. U.S. Ifhe delays to negotiate side agreements, the trade accord cannot take effecton January 1st of 1994 as planned. M. (1993, January 16). He has privatized industries and cleaned out corrupt unions,but in so doing he has attacked bastions of the PRI's 6 -year dominance,however selectively. Free trade with a developing country like Mexico isa particular concern to America's organized labor and environmentalistgroups that believe that Mexico's laws in these areas are too weak andpoorly enforced. Smith. In the long term, Salinas clearly believes that above all, aneconomic rebound would bring the voters back to the ruling party. Emphasis has been placed on the needto change regulation of foreign investment in order to increase Mexico'sattraction to multinational enterprises. Concerns were raised in Mexico when Clinton assumed office because ofa speech he made during the campaign in which he called for additional sideagreements to NAFTA on the environment and labor. H. The Economist, p. A new electoral law calling for anew voter registry and a more independent vote count was tested in 1991with numerous problems and delays as the result. Mexico has made great strides since 1982 when falling oil prices andcorruption drained the treasury and the government fought to recoup bynationalizing the country's banks. Mexico's Alternative Political Futures (pp. An open investment environment in North America is consideredgood for all three countries, and NAFTA will expand investmentopportunities in all three countries by reducing costs of inputs,reallocating resources toward more competitive industries, increasing realpurchasing power, and offering economies of scale. The creation of such a commission wouldrequire changes in American law, which might meet stiff public resistance.Clinton also wants special remedies for import surges, but these mightduplicate safeguards already contained in the agreement. His predecessor's harsh reform measures andthe fallout from the debt crisis had doomed his presidency - the debtcrisis slashed real wages by 5 percent, drove inflation to 16 percent in1987, and left half the country in abject poverty, costing him millions ofvotes in the 1988 elections. 38-39). Those in Mexico who want to see thatthe agreement is passed have to ask first whether the critics are right,and second how they can change minds if the critics are wrong (and perhapseven if they are not). President Carlos Salinas of Mexico has treated NAFTA asa major element in his development policy and as a way to "lock in" thenational, rural, and urban elements of this policy initiated by himself andPresident Miguel de la Madrid. Cornelius, J. 71.Driscoll, A. NAFTA disposes of investment barriers foreach of the member countries and mandates equal opportunities to enablebusinesses to be competitive. (1993, March 2 ). This seems likely to happen givenClinton's insistence on parallel talks on NAFTA-related social issues: He wants more money spent on environmental clean-ups; a trinational environmental-protection commission (with Canada) with powers to prevent and clean up pollution; and more money spent to help American workers who lose their jobs because of imports. Manufacturers have lowercosts because they are do not have to live by environmental standards manysee as costly. Maxfield believed that the future of government-businessrelations in Mexico would probably face the continued easing ofrestrictions on foreign investment. The results have been notable, including thelowering of triple-digit inflation, the reduction of the budget deficit tozero, an increase in domestic investment, and economic growth topping fourpercent in 1991. It also seems unlikely that he will ask formuch in return in spite the clamor in Mexico over American-Mexicanmigration issues. In December 1992 he gave his support to a plan,floated by a group of chief executives from American and Mexicancorporations, for a public-private binational commission to clean up theGulf of Mexico. Of course, before any benefits can accrue to Mexico, NAFTA has to bepassed in the United States, and overcoming opposition to the agreement hasproven to be difficult. consumers,producers and workers. foreign direct investment and12 percent of annual U.S. as companies move south to Mexico, while environmentalists fear thatNAFTA will both undermine American laws and also devastate the Mexicanenvironment as polluters move south ("After NAFTA," 1993, p. The tripartite free trade agreement between the US, Canada and Mexicois known as the North American Free Trade Agreement (NAFTA). Together, Canada and Mexicoaccount for 18 percent of the stock of U.S. because of fears that the treaty will cost thecountry a lot of jobs and that environmental standards will be ignoredreverberate through Congress. News & World Report, pp. Gentleman, & P. On the otherhand, American commentators and legislators have been pressing for bigchanges. It is hoped that financial deregulation and easing ofrestrictions for foreign investors will help restore the confidence oflarge-scale entrepreneurs with the money to make long-term investments, butthere are still other obstacles to be overcome (233). Unions predict that this will mean job and wage cuts in theU.S. Still, Salinas has not shied from exercisinghis nearly unlimited power boldly in spite of the fate of his predecessor,and he has managed to boost his own (if not his party's) popularity at thesame time. 28-29). Only a generation ago, Mexicans were ardent protectionists, buttoday they embrace the reforms embodied in NAFTA. Salinas calculates that economic reform andpolitical liberalization done simultaneously would lead to a risk of socialdisintegration, and as a result he has deferred opening up Mexico'spolitical system to genuine competition. Economists haveattributed some of these demands to Clinton's lack of experience, but inany case in the next few months President Clinton is expected to submit toCongress enabling legislation that will implement the trade agreement. Mr. Clinton has demanded, forinstance, an international commission with certain powers affectingdomestic law in NAFTA countries. 4 ). 215).Trade openings pose a problem for countries like Mexico intent onintroducing reform while not losing the capitalist base they have alreadyachieved. Opposition to NAFTA, however, has beenincreasing in the U.S. Business America, pp. For example, Clyde Prestowitz of the Economic StrategyInstitute in Washington, D.C., says that the current treaty is "the lastthing the United States needs," while Richard Gephardt, the House majorityleader (whose support for NAFTA is essential if it is to be accepted) hastold the administration that he cannot back the treaty on "a leap of faith"as he feels he is being asked to do. The Economist, pp. 3-11.Maxfield, S. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.