ABSTRACT
The North American Free Trade Agreement (NAFTA) between the United States, Mexico, and Canada, which went into effect on January 1, 1994, was one of the most controversial trade agreements in American history. What made NAFTA so contentious was, above all, the unprecedented effort to eliminate trade barriers between the United States and a much less developed country. Of the three NAFTA members, the United States and Canada are both rich, industrialized, high-wage nations already linked through the U.S.-Canadian Free Trade Agreement (FTA) of 1989. In contrast, Mexico is a less developed, low-wage nation, relatively poor in terms of national income but rich in human and natural resources. By opening up the three countries’ markets to unfettered movements of goods, services, and capital (but not labor) by the early twenty-first century, NAFTA creates a new trading bloc that will have significant effects on the location of industries and the flow of commerce both within North America and between this continent and other regions of the world. The questions of who will benefit and who will lose as a result of this international restructuring were at the heart of the controversy over the NAFTA agreement.
