North American Free Trade Agreement

Regional Paper

North American Free Trade Agreement (NAFTA) began on January 1, 1994. This agreement will remove most barriers to trade and investment among the United States, Canada, and Mexico. Under the NAFTA, all non-tariff barriers to agricultural trade between the United States and Mexico were eliminated. In addition, many tariffs were eliminated immediately, with others being phased out over periods of 5 to 15 years. This allowed for an orderly adjustment to free trade with Mexico, with full implementation beginning January 1, 2008 (USDA 2008). Regional integration is expected to stimulate intra-regional trade and investment; in the longer run it hopes to combine larger markets, tougher competition, and more efficient resource distribution which create growth for the participating economies. Smaller economies tend to be export-based with only one or two primary products.

This paper discusses the impact of trade improvement and economic integration in Mexico since 1980. Mexico is a country that has undergone the deepest process of economic reform and regional integration in the world since the mid 1980s. It first shifted its economic policy from a closed economy to trade liberalization and since 1994 to economic integration with the United States and Canada. I will discuss Mexico and why a business should promote business in their country discussing advantages and disadvantages of regional integration with stages of the economic development.

Through trade, expanded economic growth, the countries of the region demonstrate commitment to creating economic opportunities that help to distribute wealth and raise the standard of living for all (USAID 2005). Encouraging development and