Ten years ago the United States, Canada, and Mexico signed the North American Free-Trade Agreement (NAFTA).

Ten years ago the United States, Canada, and Mexico signed the North American Free-Trade Agreement (NAFTA). This agreement between the three North American countries planned to set up a free-trade market, a market between countries with no trade restriction/barriers such as tariffs, embargoes, and quotas between the trading countries, this sort of liberalized market would be unmatched throughout the world. After ten years, and through all the prosperity that has come from the agreement there have also been many negative effects, which have been suffered the worst by Mexico’s agricultural sector.

Password

Confirm Password

I agree to the terms of service and privacy policy

This is a preview of the whole essay

The United States agricultural sector is fortunate to have fertile land, a large work force, and many other factors that make it one of the largest producing agricultural markets. These factors make it possible for the U.S. to produce agricultural goods at a lower opportunity cost, amount of goods/services given up to produce a certain product, which gives the U.S. a comparative advantage over its trade partners. Mexico, being a heavy importer of U.S. agricultural products, has acquired a dependence on the U.S. imports to survive as a country, which has many negative social effects. Mexican farmers however have felt the pain economically, since the agreement they have had to compete with the massive amounts of imported goods, but since the Mexican government has eliminated all agricultural duties, taxes on goods brought from one country to another, on American imports, the prices of the imports have fallen which increases the competition even more. This economic strain put on Mexican farmers is shown in the graph below.

The first graph shows what the Mexican-agricultural sector would look like in a closed economy, a country that does not trade with other countries. The second graph shows the present day situation under the NAFTA agreement.

Before the NAFTA agreement Mexico was a closed economy and only relied on its domestic industries to produce the goods that they needed. Following the agreement Mexico’s domestic sectors have been flooded and threatened by foreign competition. A possible solution to the problem facing the Mexican agricultural situation is to reinstate duties on U.S. food imports to attempt to raise the prices and make Mexican goods look more attractive to the consumer. However more drastic changed are needed and a renegotiation of certain terms of NAFTA could be a necessary solution. A tariff to raise imports prices would increase Mexican demand for domestic products. Also a quota would allow only a set amount of U.S. imports into Mexico allowing for domestic farms to supply the majority of the demand. The realities of the renegotiations of NAFTA are unlikely although they may be extremely necessary for the sake of Mexico.