The Effects Of Nafta On Mexico Politics Essay
In as much as creating industries to increase employment and gross national incomes are important in developing a country's economy, means of trading is considered an important aspect of the inflow and outflow of products, manpower and even the number of industries from one country to another. About two decades ago, a great feat among three nations: the United States, Canada and Mexico, came into action when these three nations submitted themselves to an agreement called the North American Free Trade Agreement (NAFTA). The main objective of this agreement was to reduce the existing tariffs and any other trade barriers which can hamper the trading relationship of these three Nations. More specifically, NAFTA was proposed to establish a free trade zone of North America, which would serve 370 million people with $6.7 worth of production (Northrup & Turney, n.d.) And, like any other trading agreement, NAFTA's implementation was not instantaneous. In fact, NAFTA underwent gruelling months of negotiations before it finally took effect in January of 1994, about 14 months after it was proposed (Hufbauer & Schott 2005).
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During those 14 months, different parties, including environmentalists from all over the three nations exchanged debates and opinions about the implications of NAFTA. Alongside the free trade trends which emerged during the time of NAFTA's conceptualization, 'environmental ramifications of trade and investment liberalization have become an area of great concern' (Esty, 1994 in Gallagher, 2004 : 4 ). Concerned individuals conducted large-scale protests in parallel to the official meetings conducted by the world economy. Likewise, groups of scholars also joined in addressing the issue, by composing theoretical and empirical studies (Gallagher, 2004) to showcase the effects of NAFTA on the economy and the environment.
In this light, we can then ask, what then were the significant environmental issues which attacked NAFTA despite its proposed positive effects on economic growth? And, were these issues truly due to the implementation of NAFTA? But before answering that question, this paper will discuss NAFTA's history of conception and how important it was most especially for Mexico.
History and the making of NAFTA
Even before NAFTA's establishment in January 1994, the concept of a free trade has always been in the mind of U.S. President Ronald Reagan when spoke of a North American agreement in his 1979 campaign (Ford, 2008). Likewise, bilateral free trade agreements between Canada and the United States have already existed since 1989 when they launched the Canada-U.S Free Trade Agreement (CUSFTA); negotiations pertaining to specific sectors in the trade industry have already been conducted between U.S. and Mexico in 1985, 1987 and 1989; and bilateral trade relations between Canada and Mexico came into action in 1989 (Kose, Meredith & Towe, n.d.). NAFTA then served as an integrating trade policy which united these three countries into this one groundbreaking connection.
Mexico's president, Carlos Salinas de Gofari shortly after his election in 1988, conferred with U.S. president George Herbert Walker Bush about the proposal to join in the free trade agreement. In 1989 the United States had just completed a free trade agreement with Canada. Thereafter, the Bush administration welcomed Mexico's initiative and thus begun the negotiations in 1991 (Northrup & Turney, n.d.). The proposal for a free trade agreement in Mexico's end grew out of its officials' desire to attract foreign capital in financing more rapid economic growth in their country (Northrup & Turney, n.d.). Not only that, the Mexican administration was said to also have a political objective in pursuing the NAFTA, more concretely as Whalley (1998 in Kose, Meridith & Towe, n.d.) argued that one of Mexico's main objective was to ensure the continuity and permanence of their economic reform programs.
In much as Mexico has already pursued a policy of economic liberalization as early as the mid-1980s, NAFTA was said to be the 'culmination of a dramatic shift from a previous policy that emphasized import substitution and closely regulated commercial ties with other countries' (Lustig, Bosworth & Lawrence 1992: p. 1). This means that Mexico already had existing trade policies even before the inception of NAFTA. According to Lustig, Bosworth and Lawrence (1992), NAFTA is only considered as a 'formal recognition' of the prior changes that Mexico has experienced in their trading policies. But as what Whalley (1998 in Kose, Meridith & Towe, n.d.) said, NAFTA served as a way for Mexico to confer a degree of permanence on the reforms created they created, thereby attracting more foreign investors who will bring more capital and technology into the country.
Moreover, Mexico hoped that by joining NAFTA, the country would gain credibility especially with its reform agenda (Kose, Meredith & Towe, n.d.). Mexico embodied this credibility through its effort to implement the dispute settlement process which they thought would showcase to other NAFTA members that Mexico was sincere in implementing their reforms (Hufbauer, Schott, Grieco & Wong, 2005).
However, after NAFTA's official launch in 1994, issues and the discussions about its positive and negative effects circulated the economic world and bombarded its proponents with various protests from concerned groups and even environmentalists. At this point, we must now discuss what NAFTA offered to the three countries it involved and its implications most especially to Mexico's economy, environment and human rights conditions.
The Main Provisions of NAFTA
Generally speaking, the main concept behind NAFTA was to promote economic growth by providing a smooth movement of goods and services in the three countries involved - Canada, United States and Mexico (Ford, 2008).
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The main characteristic of this agreement was the removal of all tariffs and non-tariff barriers in the trade of goods, most especially those entering Mexico from the United States within 10 years after its conception (Hufbauer & Schott, 1993). Due to NAFTA, Mexican tariff rates decreased from 12 percent in 1993 to only 1.3 percent in 2001 (Kose, Meredith & Towe, n.d.), just eight years after its implementation.
The agreement was also proposed to protect foreign investors who will be doing operation in any of the three countries involved, against government coercion to existing restrictive policies in that country (www.tradeobservatory.org, n.d.), and thus there will be no existing investment barriers as well. This means also that under NAFTA, there will be an equal treatment amongst foreign and local investors in any country which is under this agreement.
Moreover, NAFTA also promised to ensure the preservation of intellectual property rights of the manufacturers from other countries who have transported their goods and services to another country covered by the NAFTA. (www.tradeobservatory.org, n.d.). It also covers financial services such as 'banking, insurance and securities industries', 'mechanisms for settlements of disputes' and 'side agreements covering labor and environmental issues'(Kose, Meredith &Towe, n.d : 8).
Given all these provisions, the next question to ask is: what are the implications of NAFTA on Mexico?
The Implications of NAFTA
It is beyond doubt that NAFTA's establishment provided greater opportunities for trade industries and economies to flourish. According to Hufbauer and Schott (2008), since NAFTA's implementation Americans were able to receive $200 of annual income, contributing to about $60 billion to U.S. annual national income. The removal of tariff and non-tariff barriers increased the rate of exchange of goods and services amongst the countries which NAFTA involved. More manufacturing companies were then founded in response to the demands of a growing economy, thus creating various jobs not only in the U.S. but most especially in Mexico. In figures, it has been known that NAFTA actually contributes to 18 million jobs to the U.S. job market annually, despite comments from NAFTA's critics that it has contributed to 100, 000 gross job loss (Hufbauer & Schott, 2008).
However, NAFTA's implementation in 1994 was not the end of the agreement's hard and long journey. A lot of critics and organization who were doubtful of its effectiveness came up with arguments and predictions as to what it would likely contribute besides economic integration and advancement. Critics have argued that NAFTA would have a very big effect most especially on the environment, with all the factories sprouting in the Mexican border. Besides the issues on the environment, immigration issues also caught the attention of critics since they argued that the increase in jobs would likely attract immigrants from Mexico to the U.S. side of the border, thus contributing to significant human rights issues.
The following paragraphs will now discuss in detail the particular implications of NAFTA on Mexico, most specifically on economic advancement, the environment and human rights.
Since the implementation of NAFTA, Mexico's exports to the United States and Canada more than doubled in dollar value between the years 1992 until 2002, along with a rise in trade which was from 25 percent of its GDP in 1993 to an outstanding 51 percent in the year 2000 (Kose, Meredith & Towe, n.d. ). According to Hufbauer & Schott (1993), Mexico also gained a real GDP annual growth of 3 to 4 percent in the 1990s and a considerable falling inflation rate. NAFTA also paved way for Mexico into an extended freedom to sectors such as autos, textiles and apparel, finance, telecommunications, and land transportation. In effect, Mexican exporters gained unfettered access to the U.S. market and the remaining U.S. trade barriers were liberalized (Hufbauber & Schott 1993). As what was mentioned in the previous section of this essay, NAFTA increased the exchange of goods and services from member countries due to the establishment of various manufacturing industries, thus providing more jobs for more citizens in such countries.
In Mexico's case, the establishments of Maquiladoras or otherwise called "twin-plants", contributed to most production activities most especially in the border strip of Mexico. As defined by Grossman and Krueger (1991 : 2), Maquiladoras are 'predominantly foreign-owned firms that produce largely for export to the United States under a Mexican policy that allows duty-free imports of foreign components for further processing and re-export'. According to Hufbauer, Schott, Grieco & Wong (2005), the establishment of the Maquiladoras marked a significant industrial boom in Mexico, which likely increased the export rate of Mexico towards the United States. Most notably, Mexico was even considered as the second largest trading partner of the U.S. nest to Canada within the start of the twenty-first century, which highly spurred Mexican economic growth (Nortrup, Meredith & Towe, n.d.). In effect, the Maquiladoras contributed to Mexico's rise in employment from 54, 000 to a remarkable 1.3 million in October 2000 (Hufbauer, Schott Grieco & Wong, 2005 ).
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However, Maquiladoras were on the top list of NAFTA critics as the main culprits of environmental degradation especially in the border strip of Mexico where they are situated. In the original agreement, Maquiladoras were said to have been required to be within a 20-kilometer strip along the U.S - Mexico border to qualify for special customs treatment, however, the number of plants rapidly increased due to the failure of Mexican government to regulate its expansion (Grossman & Krueger, 1991). Amidst this industrial boom in the Mexican border, these industrial developments were not accompanied by adequate infrastructure developments such as facilities for water supply, sewage treatment and hazardous waste disposal (,Haufbauer, Schott, Grieco & Wong, 2005 ), thus contributing to the environmental concern for NAFTA's implementation. These situations then strengthened the argument of most environmentalists that NAFTA did have a very profound negative effect on Mexican environment.
Scholars and environmentalists even in the beginning of the conception of NAFTA have already expressed their concern for the agreement's environmental implication most especially to Mexico. Some even went as far as formulating their predictions and theories about the connection between economic growth and environmental preservation.
Particularly, earlier in NAFTA's inception, an argument between two experts, Jadish Bhagwati (a famous economist from Columbia University) and Herman Daly (environmental economist who was then working at World Bank) sprouted. Bhagwati strongly supported what is referred to as the Environmental Kuznets Curve or EKC hypothesis while Daly supported the Pollution Hypothesis. Each hypothesis offered different views as to the connection between environmental advancement and the environment. At this point, this essay will discuss these hypotheses.
The Environmental Kuznets Curve (EKC) Hypothesis
Bhagwati argued that the government would start creating policies for environmental protection and preservation due to the increase in income generation of developing countries due to NAFTA. According to the EKC, early stages of economic growth may in effect contribute to environmental degradation, but there is a certain point in this development when the rise in income reaches a 'turning point' wherein people will then demand for environmental preservation or reduction for environmental damage (Gallagher, 2004). Although the hypothesis was found to plausible in theory, unfortunately, Mexico did not follow this trend.
The unregulated boom of the Maquiladora contributed primarily to the environmental degradation of the Mexican border strip. No infrastructure investments for waste water treatment and waste disposal were imposed, which definitely lead to the destruction in the environment.
The Pollution Haven Hypothesis
On the other hand, Daly argued that Mexico as a developing country would suffer a great environmental consequence under the implementation of NAFTA because of their inexpensive and lax pollution control policies which will likely entice heavily polluting industries from developed countries to move operations in Mexico (Hufbauer, Schott, Grieco & Wong, 2005). According to Temursheov (2006 : 2), 'developing countries will soon develop a comparative advantage in pollution-intensive industries and become havens for the world's polluting industries' Thus, developing countries are seen to offer a good spot for industries, most especially those pollution-incentive ones to flourish under unregulated grounds. This benefit those countries that move to the developing country in terms of environmental quality, but at the end of the developing country will create much environmental setbacks.
The EKC and Pollution Haven Hypothesis Implications
Gallagher (2004) created a study which aimed to empirically show if NAFTA's industrial boom did have an effect on Mexico's air quality or the environment as a whole. However, he has found out that Bhagwati's argument using the EKC hypothesis and Daly's argument using the Pollution haven Hypothesis were not supported by the study he has conducted.
With regards to the EKC hypothesis, Gallagher (2004) has concluded from his findings that rising incomes in Mexico did not stop environmental problems from worsening when NAFTA was implemented. More so, with regards to the Pollution Haven Hypothesis, Gallagher did not find facts to support the argument that increase in heavily polluting industries from the US to Mexico in the Maquiladora system are what caused the grave destructions to the environment. In fact Gallagher's study was able to show that the percentage of dirty industry in Mexican economy actually declined. Gallagher argued that it was the Mexican government's inability to implement policies and give proper attention about the growing industry which led to the environmental degradation.
Moreover, Grossmann & Krueger (1991) proposed three explanations as to how the change in trade and foreign investment policies can affect the level of pollution and the rate of scarce environmental resource. The first was the Scale Effect which explained that trade and investment liberalization causes expansion in economic activity, however, if the means or nature of the activity does not improve along time, then pollution would increase. The example given by Grossmann and Krueger was the case of petroleum. The main process of getting petroleum which is used for energy consumption is to burn fossil fuels. Economic growth in turn increases the demand for energy and thus more petroleum will be needed, but then if the same method of acquiring petroleum will be used which is through burning fossil fuels, pollution will rise along with the increase in input.
Next is the Composition Effect. Grossmann and Krueger (1991 : 4) explained this effect as the phenomenon wherein countries tend to 'specialize more completely in the activities that its government does not regulate strictly'. Trade liberalization likely gives these countries better options in where to hold operations, provided for example that their trade partners also have lax regulations for such trade and plus cost for production or labor would be cheaper in that particular country. This is quite similar to the Pollution Haven Hypothesis discussed earlier. The host country, with the existing weak regulation most especially for pollution control gains comparative advantage and thus becomes a haven for pollution-incentive industries.
Lastly' there is what Grossman and Krueger referred to as the Technique effect. It is somewhat a response to the Scale effect since it actually explains that trade liberalization gives developing countries the chance to find better means in producing outputs in the most environmentally friendly way, most particularly those industries that yield more hazardous output to the environment. A possible advantage of relaxed restrictions on foreign investments, according to Grossmann and Krueger maybe that it enables foreign industries to transfer modern technologies to the developing country that they want to operate in. Similar to the EKC hypothesis, the Technique effect also says that increase in income levels due to trade liberalization will eventually lead the government to demand for a cleaner environment and thus a call for the government to implement more strict pollution standards and enforcement.
In as much as the issue for environmental degradation is concerned, experts and level-minded groups contend that NAFTA cannot be entirely blamed for the environmental setbacks that Mexico has experience since their economic integration. As in the case of the Maquiladoras, it has been identified that poor infrastructures and facilities to treat or dispose wastes were the main reasons why environmental degradation occurred. More so, the government had a major role in ensuring that the industries receive proper monitoring and that budget is allocated to give the various industries financial assistants in acquiring waste treatment and disposal facilities. It is in this light that experts argue that NAFTA is not to be entirely blamed for the perils of environmental degradation but also the weak policy enforcement of Mexico, as the host country for most trading industries.
Human Rights: The issues of Immigration, Labor and Wages
Aside from the environmental concerns with regards to NAFTA's implementation, other factors which pertained to social demographics surrounded NAFTA after its implementation. In particular; immigration, labor and wages were amongst the most significant issues. The economic expansion led to the opening of more and more manufacturing plants and thus opened more and more jobs most especially for Mexicans when firms moved their operation from the U.S. or Canada into Mexico. The creation of more jobs had both advantages and disadvantages which were exhibited in different ways. It was clear in the beginning that the creation of more jobs most likely improved the life of most Americans and Mexicans by increasing the income to almost $200 annually. But in this section of this paper, we will discuss the perceived negative effects of the economic expansion on social demographics which occurred due to the implementation of NAFTA.
The increase in jobs most particularly in the Mexican border strip caused a significant impact in the migration behavior of Mexicans. Mexicans from the rural areas of the country started moving into the urban areas to acquire jobs in the various plants that have opened. In effect, the agricultural sector of Mexico was gravely affected when farmers started moving inward into the city to work for manufacturing companies. Inward movement of people was not the only issue significant during NAFTA's implementation. The issue of illegal immigration also surfaced. In fact the annual average of illegal Mexican immigrants rose from 315, 000 during this decade from 270, 000 in the 1990s (Hufbauer & Schott, 2008). What makes illegal immigration a human rights issue is when migrants become subject to violations of their basic rights since they are undocumented and not protected by domestic labor and employment laws, they are very vulnerable to violations (Bayefsky, Fitzpatrick & Helton, 2006 ). Discrimination against migrant workers became a grave issue upon the rise of illegal immigration from Mexico to the United States. As mentioned by Bayefsky, Fitzpatrick and Heltion (2006), undocumented migrant workers experienced exploitation in the forms of threats of deportation, limitation to the type of work they are assigned to and most are not even given job security.
However, experts were still convinced that the phenomenon cannot be entirely attributed solely to the implementation of NAFTA. In fact, NAFTA had nothing to do with the issue. Instead, according to Hufbauer and Schott (2008) the rise of immigration was attributed to economic and political shocks. Furthermore, according to Hufbauer and Schott (2008 : 22) these shocks were: 'the peso crisis of the mid-1990s, sharp competition from China, and escalating drug wars'. Because of these forces, Mexican economy did not maintain steady advancement thus affecting of course the rate of wages in the country.
Still according to Hufbauer and Schott, U.S. wages were comparatively higher than Mexican wages in 2006, with one U.S. citizen receiving compensation of $20.60 per hour and one Mexican receiving only $3.70. There is an outstanding difference between those two figures, and experts speculate that it is for this main reason why Mexicans often opt to illegally immigrate into the United States in the hopes of acquiring jobs and thereby receiving higher compensation. In a book written by Hufbauer and Schott (1993) earlier in the implementation of NAFTA, they have argued that Mexican wages lagged behind due to the inefficient production growth as a result of the unavailability of skilled workers in Mexican Labor. More so, the authors have argued that production only increased as far as export generating industries were concerned and not for local concerns such as agriculture or services.
Along with the churn of the job market in Mexico, Americans perceived NAFTA's consequences will affect them in such a way that citizens from the United States would lose their jobs because all jobs would then be brought to Mexico. Job loss became a very significant concern most especially to the United States. In fact, United States Barrack Obama, in his years as a Senator had a very strong argument against NAFTA and its ill effects to American job market. In the article written by Hufbauer and Schott (2008 : 20), they mentioned how the former senator Obama claimed that "one million jobs have been lost because of NAFTA." Although Hufbauer and Schott did admit that it was there was a degree of truth that NAFTA did cause job loss, they have provided statistics which illustrated that in the U.S. about 16.5 million people quit or lose their jobs while 18 million take in new jobs each year, thereby showing that NAFTA has even created more jobs than the average number of job loss.
Most central when it comes to the issue on human rights with regards to NAFTA was the issue on freedom to express protests by union organizations. Evans (1998) cited a situation wherein employers threatened union organization by placing 'Mexico Transfer Job' in front of their plants to scare or stop the organizing efforts of unions that the company will transfer to Mexico if they continue their strike. Furthermore, according to Evans when these strikes do succeed in the efforts of the organizing union, the plant owners stop some parts or even the whole operation. According to Bronfenbrener (1997 in Evans, 1998), the rate of plant-closing threats are twice as high in manufacturing industries. This is in part, still related to the issue of illegal immigration because undocumented workers are often threatened to be deported when they join union organizing activities (Bayefsky, Fitzpatrick & Helton, 2006).
From what has been discussed in the previous paragraphs, it can be implied that the issues of immigration, labor and wages are somewhat related and affect each other. The need to immigrate is brought about by the need of Mexican citizens to seek greater wages in the United States. The inability of wages in Mexico to rise is viewed to be due to the inefficient productivity in the country due to a rising pool of unskilled workers since the services of Mexican experts are always concentrated on the export sector. The rise of industries leads Mexicans to migrate from the rural to urban areas and even as far as the United States. And thus, undocumented migrants to the U.S. are mostly the victims of exploitation.
However, if the question we consider is if NAFTA was the direct reason why all these issues emerged, then it will be an erroneous argument. We have seen the chain reaction which happened from the economic expansion to the rise of employment, to job loss, to immigration and then leading to human rights violations. It is important to see that although NAFTA did trigger the economic expansion, it did not directly cause the discrimination and exploitation that happened after its implementation.
Although it may appear that NAFTA did have very profound effects on Mexico's environment and human rights issues, it will be very impractical to attribute all the misfortunes to the agreement alone. As what has been discussed in the environmental aspect, the Maquiladoras were the effect of an unregulated economic expansion. The Mexican government was unable to provide policies which will cater to pollution control, and likewise they were not able to provide incentives for waste treatment and disposal infrastructures which were very essential in limiting pollutants in the environment.
In fairness to Mexico, the government did try to develop programs to cater to environmental hazards resulting from NAFTA. Amongst this is the Mexican Federal Environmental Protection Agency, which covered all public-sector industries and big private industries. The agency provided a mutual relationship with the firms it involved since it required the firms to initiate pollution prevention, through providing their own treatment facilities, while the agency in turn provided them with waivers and a reduction of inspection (Hufbauer, Schott, Grieco & Wong, 2005). Accorning to Hufbauer, Shcott, Grieco and Wong (2005), this plan was supposed to be effective, however the fact remained that 90 percent of Mexican firms were small to medium sized, and thus not all companies provide themselves environmentally friendly facilities.
On the other hand there was the Border 2012 Program of U.S. and Mexico. This program was founded to cater to the specific environmental issues that the border was facing. Its goal was to set objectives for border cleanup through the creating infrastructures for waste treatment and disposal (Hufbauer, Schott, Grieco & Wong, 2005). And as written in the U.S. Environmental Protection Agency's official website, the Border 2012 has six very important goals in its inception and these are to 'Reduce Water Contamination, Reduce Air Pollution, Reduce Land Contamination, Improve Environmental Health, Emergency Preparedness and Response and Environmental Stewardship'. The border 2012 monitors progress of its programs with the help of the Border Indicators Task Force Background (BITF) which was established in December 2003 (US-Mexico Border 2012 Program: Measuring Conditions and Progress, 2009). Moreover, the BITF is the one assigned to measure the progress and effectiveness of a program in providing change for a certain environmental condition. By this sense, although Mexico had setbacks in the earlier stage of NAFTA's implementation, it is clear that the government also exerted efforts in addressing the very essential environmental issues that bombarded the country.
Looking into the various literatures pertaining to NAFTA and its alleged effect on the environment, there is reason to say that the implementation of NAFTA may have contributed to the environmental degradation in Mexico. However it is improper to directly blame NAFTA for all the environmental misfortunes that happened after NAFTA's implementation. As what has been pointed out earlier, the environmental degradation that Mexico experienced was primarily due to the government's failure to create policies that will regulate on the waste treatment and disposal infrastructures of the various industries that were built, most especially in the Mexican border strip. The Environmental Kuznets Curve was plausible in theory. If Mexico would reach a certain turning point in per capita income, it would lead the government to seek ways to conserve the environment, however, provided only that the government implement firm policies and discipline as to environmental issues. Besides that, Mexico as a pollution haven could have been prevented or even helped if modern technology was wisely introduced in the old production techniques to create cleaner and more environmentally friendly outputs, as what the technique effect argues. Despite the environmental perils that Mexico suffered indirectly because of NAFTA, they strived to form agencies and laws which supposedly would help in reducing the damaging effects of economic expansion. As in the case of the Mexican Federal Environmental Protection Agency, although they have supposedly provided a mutual relationship with industrial firms by signing them waivers if only they provide themselves with the proper facilities which would be environmentally friendly, the fact that 90 percent of the firms in Mexico were small to medium sized caused the failure of that effort to regulate. Small and medium sized firms did not have the financial support to provide themselves with complete waste treatment and disposal facilities.
A chain reaction in the issues of immigration, labor and wages also existed after NAFTA's implementation. Free trade paved way to economic expansion by letting foreign industries to invest inside the Mexican border. The industries multiplied in numbers and thus created more jobs to cater to more citizens. However, Mexico's economic advancement was thwarted due to the peso crisis of the mid-1990s, the existence of a sharp competition from China, and escalating drug wars in the country. These key factors primarily caused wages in the country to decline. Another foreseen reason was the inefficient production in Mexico which experts attribute as an effect of the increase in the pool of unskilled workers in the country. In hopes of seeking and stumbling on greener pastures, Mexicans try to sneak into the United States where wages were seven folds higher than the local wages. This then increased the cases of illegal immigration from Mexico to United States which created serious issues on human rights. Undocumented immigrants were exploited in the United States. Amongst the common abuses were the threats of deportation if they join union organizing activities, some were even prohibited to do particular kind of jobs because of their status. Discrimination was very evident during that time, and these people were vulnerable to such abuses because they were not covered by the domestic labor and employment laws. Moreover, firms gained such power as to threaten the closure of their plants if ever unions will try to win their principles. Mostly in the U.S, firms threaten union organizers that they will transfer jobs to Mexico if they continue union organizing strikes. It became very easy for firms to threaten laborers and scare them with transferring operation to another place, which will likely lead to lay-off or termination from their jobs.
In a sense, NAFTA was not entirely the devil which led to all the turmoil that happened in the environment and human rights condition in Mexico. There were other factors which led to the incidents, and it is wrong to blame NAFTA directly for these negative effects. NAFTA was the catalyst for economic growth, however Mexico may not have been prepared to experience the drastic change that NAFTA will bring about, and they have probably not foreseen the consequences and planned systematically on how they are going to address future issues. However, NAFTA remains ground breaking despite the issues surrounding it. It is still beyond doubt that NAFTA's conception has opened more opportunities for economic development among the three countries involved.
Even until now, experts are still in debate whether NAFTA truly created more positive effects than negative ones. But beyond that, there is enough reason to argue that NAFTA was effective in its goal of promoting economic growth. Statistics have already proven that NAFTA did help Mexico's economy gain advancement by increasing its per capita income. In a sense NAFTA can be compared to a double-edged sword, with two sharp edges, one on the positive side and one on the negative side. On the positive side, NAFTA clearly was able to improve life in Mexico by providing jobs and raising per capita income of Mexicans. However of course, the negative side was that the environment and human rights were somewhat left with serious issues that needed to be resolved. However, the obvious mediating factor between NAFTA and its perceived negative effects is the Mexican government's effectiveness in implementing policies which regulated most especially those facilities which were essential in creating environmentally friendly industries. According to Hufbauer & Schott (2008), the pitfalls of the Mexican economy when it came to wage and labor issues did not occur because of NAFTA, instead these were the results of a poor political system which was not able to deliver tax and energy reforms. These are supposedly essential in financially supporting investments for infrastructures needed to treat production wastes. More so, the Mexican government was not able to generate funds for education.
As what was mentioned in the previous section about wage issues, it was said that wages in Mexico lagged due to the inability of Mexico to efficiently produce goods primarily because their factories employed more unskilled workers. In a sense, we can say that education may play a very big role in shaping Mexico's economy because by educating the people, their skills also improve. The long term effects of course would be improvement in production and thus better wages. However, the role of the government is viewed as very essential in shaping the economy and social demographics. Strong policies, most especially pertaining to the environment would likely help industries to operate in safer and less polluting means, whereas policies will also let the government acquire other means of production through modern technology.
A strong commitment from the government to strictly implement policies and the cooperation from its citizens are most likely the key factors which would lead towards the success of NAFTA over the long years to come. NAFTA clearly has the potential to overcome the issues on environmental degradation and social demographics if an only if commitment exists between the government, the foreign investors and the citizens. One of the recent issues in the environment concerning many industries today is the issue on climate change. In Hufbauer and Schotts (2008) article, they argue that trade partners must soon come up with 'common industrial standards and competitiveness provisions' which may not apply only to international trade but to regional trade as well. Clearly, this will be a remarkable move towards establishing policies not only for international trade which concentrates on exports but also on local or regional industries alike. In turn, reinforcement of regional trade will likely stabilize the migrating behaviour of many Mexican, since they will then see that they can acquire as much opportunities in Mexico as compared to the United States. Because of this, not one Mexican would have to illegally immigrate to seek greener pastures in Mexico, because their own backyards would already be greener. And by this, not one Mexican undocumented immigrant would have to be exploited and not one would have to experience abuses abroad.
In a lighter note, the discussions and debates about NAFTA can also be seen as an important factor in improving the agreement. It is during these discussions that the NAFTA proponents and members can identify the shortcomings of NAFTA during the previous years, including the significant issues which need to be addressed pertaining NAFTA and even its indirect effect to various aspects of country such as the environment and social demographics. The discussions and arguments will also challenge the proponents and government leaders to improve in whatever aspect they need to improve in so that implementation of NAFTA would be smooth sailing.
According to Hufbauer and Schott (1993), the factors that would help NAFTA reach its full potential would largely depend on government policies, leading to production of better workers through education and the effective use of technology. In a sense, NAFTA, without the integration of these factors, would then simply mean nothing to the world.
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