Editing Economy of Mexico (section)

====North American Trade Agreement and the USMCA Agreement====
{{Main|North American Free Trade Agreement|USMCA}}
[[File:NAFTA logo.svg|thumb|The [[NAFTA]] emblem]]
[[Image:Carreteras Duplas de Mexico 2025.jpg|thumb|right|[[Dual carriageway]] highways in Mexico, in red. To facilitate trade and exports, especially to the United States, Mexico has improved its highways.]]

The 1994 North American Trade Agreement (NAFTA) is by far the most important Trade Agreement Mexico has signed both in the magnitude of reciprocal trade with its partners as well as in its scope. Unlike the rest of the Free Trade Agreements that Mexico has signed, NAFTA is more comprehensive in its scope and was complemented by the North American Agreement for Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC). An updating of the 1994 NAFTA, the U.S., Mexico, Canada ([[USMCA]]) is pending in early 2020, awaiting the ratification by Canada; the U.S. and Mexico have ratified it.

The NAAEC agreement was a response to environmentalists' concerns that companies would relocate to Mexico or the United States would lower its standards if the three countries did not achieve a unanimous regulation on the environment. The NAAEC, in an aim to be more than a set of environmental regulations, established the North American Commission for Environmental Cooperation (NACEC), a mechanism for addressing trade and environmental issues, the North American Development Bank (NADBank) for assisting and financing investments in pollution reduction and the Border Environmental Cooperation Commission (BECC). The NADBank and the BECC have provided economic benefits to Mexico by financing 36 projects, mostly in the water sector. By complementing NAFTA with the NAAEC, it has been labeled the "greenest" trade agreement.<ref>{{Citation |last1=Hufbauer |first1=G.C. |last2=Schott |first2=J.J . |contribution=Chapter 3, Environment |contribution-url=http://www.iie.com/publications/chapters_preview/332/03iie3349.pdf |title=NAFTA Revisited: Achievements and Challenges |location=Washington, DC |publisher=Institute for International Economics |date=October 2005 |pages=[https://archive.org/details/naftarevisitedac00hufb/page/1 1–78] |isbn=0-88132-334-9 |url=https://archive.org/details/naftarevisitedac00hufb/page/1 }}</ref>

The NAALC supplement to NAFTA aimed to create a foundation for cooperation among the three members for the resolution of labor problems, as well as to promote greater cooperation among trade unions and social organizations in all three countries, in order to fight for the improvement of labor conditions. Though most economists agree that it is difficult to assess the direct impact of the NAALC, it is agreed that there has been a convergence of labor standards in North America. Given its limitations, however, NAALC has not produced (and in fact was not intended to achieve) convergence in employment, productivity and salary trend in North America.<ref name="lessons"/>

The agreement fell short in liberalizing movement of people across the three countries. In a limited way, however, immigration of skilled Mexican and Canadian workers to the United States was permitted under the [[TN status]]. NAFTA allows for a wide list of professions, most of which require at least a bachelor's degree, for which a Mexican or a Canadian citizen can request TN status and temporarily immigrate to the United States. Unlike the visas available to other countries, TN status requires no sponsorship, but simply a job offer letter.

[[File:President Donald J. Trump at the G20 Summit (44300765490).jpg|thumb|300px|left|Outgoing Mexican President [[Enrique Peña Nieto]], U.S. President [[Donald Trump]], and Canadian Prime Minister [[Justin Trudeau]] sign the agreement during the [[2018 G20 Buenos Aires summit|G20 summit]] in [[Buenos Aires]], Argentina, on November 30, 2018.]]

The overall benefits of NAFTA have been quantified by several economists, whose findings have been reported in several publications like the [[World Bank]]'s Lessons from NAFTA for Latin America and the Caribbean,<ref name="lessons"/> NAFTA's Impact on North America,<ref>{{cite book   | last = Weinstraub  | first = S  | title = NAFTA's Impact on North America: The First Decade  | publisher=CSIS Press: Washington, DC  | year = 2004  | isbn=0-89206-451-X }}</ref> and NAFTA revisited by the Institute for International Economics.<ref name="Hufbauer"/> They assess that NAFTA has been positive for Mexico, whose poverty rates have fallen, and real income salaries have risen even after accounting for the 1994–1995 economic crisis. Nonetheless, they also state that it has not been enough, or fast enough, to produce an economic convergence nor to reduce the poverty rates substantially or to promote higher rates of growth. Beside this the textile industry gain hype with this agreement and the textile industry in Mexico gained open access to the American market, promoting exports to the United States. The value of Mexican cotton and apparel exports to the U.S. grew from $3&nbsp;billion in 1995 to $8.4&nbsp;billion in 2002, a record high of $9.4&nbsp;billion in 2000. At the same time, the share of Mexico's cotton textile market the U.S. has increased from 8 percent in 1995 to 13 percent in 2002.{{citation needed|date=October 2014}} Some have suggested that in order to fully benefit from the agreement Mexico should invest in education and promote innovation as well as in infrastructure and agriculture.<ref name="lessons">{{cite book  | last = Lederman  | first = Daniel  | author2 = William F. Maloney  | author3 = Luis Servén  | title = Lessons from NAFTA for Latin American and Caribbean Countries: A Summary of Research Findings  | publisher = The [[World Bank]]  | year = 2004  | url = http://www.iie.com/publications/chapters_preview/332/02iie3349.pdf  | isbn = 0-8213-5813-8  | access-date = May 29, 2007 | archive-date = June 20, 2007 | archive-url = https://web.archive.org/web/20070620130718/http://www.iie.com/publications/chapters_preview/332/02iie3349.pdf  | url-status = dead  }}</ref>

Contrary to popular belief, the [[maquiladora]] program existed far before NAFTA, dating to 1965. A maquiladora manufacturer operates by importing raw materials into Mexico either tariff free (NAFTA) or at a reduced rate on a temporary basis (18 months) and then using Mexico's relatively less expensive labor costs to produce finished goods for export. Prior to NAFTA maquiladora companies importing raw materials from anywhere in the world were given preferential tariff rates by the Mexican government so long as the finished good was for export. The US, prior to NAFTA, allowed Maquiladora manufactured goods to be imported into the US with the tariff rate only being applied to the value of non US raw materials used to produce the good, thus reducing the tariff relative to other countries. NAFTA has eliminated all tariffs on goods between the two countries, but for the maquiladora industry significantly increased the tariff rates for goods sourced outside of NAFTA.{{citation needed|date=October 2014}}

Given the overall size of trade between Mexico and the United States, there are remarkably few trade disputes, involving relatively small dollar amounts. These disputes are generally settled in WTO or NAFTA panels or through negotiations between the two countries. The most significant areas of friction involve trucking, sugar, [[high-fructose corn syrup]], and a number of other agricultural products.<ref name="Hufbauer Agriculture"/>