1. 1
2015. NAFTA 1994/2014, Effects on Mexico
1. Introduction.
The purpose of this research is to analyze the effects
produced in Mexico by the North American Free Trade
Agreement, in macroeconomic, social, demographic,
political terms and in security and migration aspects, in
its first twenty years of implementation.
The analysis will include the foundational aspects that
led to its development, the approval process in general
terms, the evolution of indicators and evaluation of
different aspects mentioned.
2. Background.
Major global macroeconomic events and their
consequences in Mexico were preparing the way for the
creation of the Treaty of free trade in North America
(NAFTA).
As described Marquez, Graciela (2014) 1, the period 1945-
1982 was building an enviable model of economic
expansion in the region, based on industrialization model
that basically considered the needs and internal demands.
It is what she considered the rise and the decline of the
industrialization model.
The focus on the domestic manufacturing sector was the
source of positive results but simultaneously was the
reason that ended hurting public finances and growth
prospects in the long term.
No doubt the structural shortcomings of the closed system
are compounded by handling errors and excesses of the
different administrations that were leading to the default
crisis occurred in 1982.
In 1966, Raymond Vernon had warned that the support of

2. 2
the "Mexican miracle" led to the choice of one of two ways,
since the model of import substitution industrialization
(ISI) was running out.
One of those ways was to abandon the protection of
domestic industries and opening the economy to
competition and foreign investment, with options to
access the international capital for development.
Politically unsustainable 2 option at the time.
The other way was to support the continuation of growth
through public spending, with the restriction that this
option was unsustainable over time.
This was the path chosen by the different
administrations until the start of the opening that took
place with De la Madrid.
Populist policies developed by the different
administrations of the Institutional Revolutionary Party
(PRI), more specifically from the government of Adolfo
Lopez Mateos (1958-1964), put emphasis on food
distribution, building schools and public housing, the
launch of the distribution of a percentage of corporate
profits to unionized employees, and nationalization of
energy companies.
Most of these activities demanded increasing amounts of
funds and fed a significant deficit in the accounts of the
nation.
The deepening of these public policies becomes even more
evident during the administration of Luis Echeverria
(1970-1976). The continued nationalization processes
including mining, land distribution in some northern
states, and the establishment of limits on foreign
investment.
In this period had its heyday the policy of import
substitution industrialization, which somehow was a

3. 3
response to the global crisis, but had some features that
could lay the groundwork for future difficulties in the
sense of making a certain block of activities related to
conducting exchanges with the outside, and became in
many cases generator of subsidies to local industries, and
given the relatively high level of corruption, could promote
relations with certain economic groups.
ISI policy undoubtedly was a response that generated the
bases of many local industries, with the consequent effect
on employment generation and social improvement.
During the Echeverria government subsidies had an even
greater boost, with a focus on housing construction, social
coverage to a larger portion of society plans, and
education.
Despite the increase in oil prices and growing discoveries
of reserves in land and maritime platform, Mexico needed
funds to cover government policies mentioned, and that
led to significant levels of debt with multilateral
institutions, and the consequent growth national external
debt.
During the Lopez Portillo (1976-1982), the trend of
generation of high deficits of the national current account
continued in full swing, with the consequent level of debt
becoming unmanageable.
One element that could have helped reduce the debt
crisis, was the area of public revenue through taxes.
During the different administrations of the PRI and even
today, it remains low. Already in 1917 an American
consultant, Henry Chandler, had expressed the need to
increase the contribution through income tax.
Years later, in the early sixties, the British economist
Nicholas Kaldor, at the request of the Secretary of Finance

4. 4
and Public Credit, Antonio Ortiz Mena, had suggested
progressive rates of this tax to higher revenues and
expansion of the tax base.
These recommendations continue to be politically of
unviable implementation (Marquez, Graciela. 2014).
One of the major macroeconomic crisis in the country and
the region, occurred in the second half of 1982 (1/2/3 graphic)
when Mexico was forced to declare the country in default
unilaterally and to request extension of the payment dates
set along with new forms of financing.
Among the measures related to face this crisis, was the
nationalization of the Mexican banking system.
The shift toward opening the economy, and perhaps the
first indication of the possibility that in later years to
gestate NAFTA, occurred in the administration of Miguel
de la Madrid (1982-1988).
It was gradually favoring the inflow of foreign
investment, and significant privatization of state
enterprises, a remarkable difference to what happened
during the first 53 years of the PRI 's economic policies.
The need for growth and openness able to satisfy young
and growing population of Mexico, leading to the Madrid
guide the economy toward an opening, a profound change
in relation to the protectionist orientation of previous
decades.
The first formal indicator in this sense, was the adherence
to the GATT in 1986, as a formal manifestation of a policy
change and focus on generating foreign exchange in an
intensification of exports.
At the end of the mandate the president De la Madrid,
launched the Economic Solidarity Pact, whose main

5. 5
pillars tried to put a brake on inflation through lower
wage increases and thus containing overall demand.
The other pillars were: the change in exchange rate policy,
abandoning the fixed one; reducing barriers to
international trade through tariff reductions / elimination
export taxes, and the elimination of subsidies with
emphasis on privatization of state enterprises.
The adoption of an economic policy, by Carlos Salinas de
Gortari (1988-1994), framed in the neoliberal trend of
those times, conducted to complete privatization process,
as happened with the banking system and Telefonos de
Mexico (TELMEX ).
Salinas de Gortari’s Development Plan, aimed at improving
living conditions through the recovery of the Mexican
economy, bringing a substantial reduction of inflation to
single digit levels for the first time in many years.
He continued the process of integration of Mexico into the
international system, and it became one of the first
countries in the region to join in 1994 the OECD
(Organization for Economic Co-Operation and
Development).
Salinas administration took the initiative to propose a
wide – range trade agreement with the United States, as
an alternative to generating genuine export earnings, job
creation and greater transparency of the economy.
United States during the administration of George Bush,
undertook an initiative that sought to help countries
involved in the problems of debt, initiated by the
insolvency of Mexico to meet its commitments in 1982.
This initiative called the Brady Plan whose main tool
would be known as bonds with the name of Nicholas
Brady Treasury Secretary. Essentially a program of debt

6. 6
reduction, which would be materialized through the so -
called Brady Bonds, which would transform bad debts on
these certificates zero coupon backed by the US Treasury,
and offered guarantees in raw material available in
countries originally.
It is noteworthy that the first attempts of the Salinas’
administration in this regard were directed to establish
such agreement with Japan and the European Union, but
perceiving that the answer was not decidedly positive,
efforts were concentrated on achieving agreements with
the United States in mid 1990.
In the process of primary negotiations on the treaty,
Canada, which had already signed similar agreement
with the United States in 1987, CUSFTA (Canada US Free
Trade agreement) was added to give an even broader
spectrum of coverage and so to complete an exchange that
entirely cover the territory of North America.
The negotiation process that began Salinas de Gortari
with President George Bush (1993-2001) was confirmed
by his successor Bill Clinton, who initially had
reservations about the treaty.
Clinton's proposal to confirm the Treaty with the
Legislature, included the creation of parallel agreement
on Environment and Labor Affairs.
When NAFTA was initiated included two developed
economies and one in process of development, whose GDP
combined in dollar terms corresponded to a trillion dollars
and considered a population of 360 million people.
Twenty years later in 2014, the joint GDP of the member
countries of the Treaty, formed an economy of 20 trillion
dollars with a total population of 480 millions 4.
NAFTA relative to world GDP in 2014, 77.9 trillion
current dollars, it meant 26.3% of the same and its

7. 7
population represents 6.6% of the world.
The Industrialization Program of the Northern Border
started in 1965 in Mexico, as an alternative that could
soften the impact of the US Bracero Plan, given pressures
form unions in that country, and that gave opportunities
for legal temporary work to Mexican citizens.
The Industrialization Program of the Northern Border,
had similarities with ZPEs, processing zone exports,
which existed in Southeast Asia, where the essence was
the reduction of the cost of labor, compared with
developed countries, and that were affected by the wage
increases pressure performed by unions. 5
Modern maquiladoras perform product assembly
operations, that once processed are re-exported to the
United States.
All this facilitated by the significant reduction in tariffs
for both the import of raw materials and components from
the United States, and for subsequent export to the same
country.
The origin of this concept dates back to the thirties of last
century, when to driving engine was the development of
the northern region while simultaneously reducing fears
of conflicts like the ones that happened in the past in
Texas, including war between the two countries in mid
XIX century.
In some cities free perimeters were created as free trade
zone .
This initiative was followed by the National Border
Program (PRONAF), in 1961, designed to promote
economic and social development of border regions.
In the vision of Jaime Serra Puche, Secretary of Industry

8. 8
and Trade of the Salinas’ Administration and one of the
main responsible for the negotiation and subsequent
signing of the Treaty by the Mexican government, the
origin of the commercial opening of Mexico, was
constructed by joining the GATT in 1986, the signing of
the Economic Solidarity Pact in 1987, and NAFTA in
effect from 1 January 1994.
Serra Puche imagined Free Trade Agreements with the
European Union and Japan, like other clear
demonstrations of the opening process formally began in
1986.
Incorporating to the GATT was formally a clear signal of
change Mexico's trade policy, giving priority to exports
over imports, and thus initiating the shift policy import
substitution industrialization.
The consolidation of this change is more noticeable with
one of the measures promoted by the Economic Solidarity
Pact, and this is what establishes the maximum tariff of
20% in all sectors.
Some highlights in the contributions done by Serra Puche,
refers to what were the primary guidelines that led to the
Salinas’ administration in seeking to achieve the
exchange treaty with the main economic power in the
world.
They were conceived as a way to get to Mexico out of the
continuing economic crisis in the last decades of the last
century, and find ways to ensure the growth and
distribution of wealth, thus trying to reduce the high
participation of segments of the population living in
poverty and extreme poverty.
These guidelines sought, first drove the growth of non - oil
exports, to reduce the risk of high dependence on the
latter industry and thus boost production sectors using

9. 9
labor intensive activities.
The second aspect that was pursued was to ensure the
inflow of foreign direct investment to the country, which
added to future domestic savings that could be generated,
would ensure macroeconomic and social goals.
3. Macroeconomic Effects.
One of the effects that mentioned Serra Puche, is the
elimination of the distortion between the relative price
between exportable and importable goods, with events
such as the extension of consumer options in Mexico and
the significant increase of daily exports, which multiplied
ten times in the period 1993/2013, reaching 1000 million
in 2013.
As Castaneda (2014) points out, NAFTA had a very
positive effect on the increase in Mexican exports, which
somehow as mentioned, had begun a growth trend with
trade liberalization implemented by the administration of
President de la Madrid.
US exports grew from 60 billion in 1994 to nearly US $
400 billion in 2013 7.
One of the goals that were mentioned during the
construction of the Treaty by Mexico, was to secure a
significant inflow of foreign direct investment in the
country.
Serra Puche mentions that the average foreign
investment in the five years before the Treaty was about
2,000 million dollars. In the last five years that average
increased to 20.000 million.
Castañeda in the Foreign Affairs article "NAFTA's Mixed
Records" notes that the Treaty did not have the expected
impact on generating an income level of foreign direct

10. 10
investment needed to supply the required target of 5%
annual GDP growth.
The result of foreign direct investment, in the duration of
NAFTA, was less than 2% of GDP.
A different perspective to see the effects of NAFTA, is that
developed by Caliendo, Lorenzo in the compilation by
Boskin, Michael (2014) 8.
One of the point refers to the disparity of members of the
Treaty in its economic development and the main
macroeconomic variables.
An example of this is the GDP per capita of Mexico that
was to begin the Treaty corresponding one - fifth of the
United States.
Something to note is something that happened before the
Treaty but was strengthened in it, is the great exchange
of intermediate goods, and in the case of Mexico 80% of its
imports from the United States and Canada are such
goods. In contrast Mexico mainly exports final goods to
partners in the Treaty.
Analyzing the effects of NAFTA, Caliendo emphasizes the
analytical difficulty in extracting the true meaning of the
Treaty, considering that important events occurred that
somehow had an impact on the region in the period under
analysis, the first twenty years of the same.
Important events were the Tequila crisis in 1995, the
bubble of the ".com" in America and eventually China's
entry to the World Trade Organization.
In addition Mexico has signed more than 10 trade treaties
since 2006, which undoubtedly had its effect on
macroeconomic variables of the country.
His conclusion is the generation of "trade creation" in
Mexico, that helped to positive changes in the real wage
in a greater extent than what happened in Canada and

11. 11
the United States.
Serra Puche commented on a compilation done by Boskin,
that NAFTA did not produce "Trade Diversion" or the
derivation of trade to a less efficient member, which in
this case could be considered to Mexico, given the degree
of development of the other two partners Treaty and is not
therefore appropriate management of tariffs, but
essentially by the existence of rules of origin.
With the same argument defended free trade agreements
such as NAFTA, considering them as building blocks of
international trade, but that would require some
adjustment in establishing the World Trade Organization,
to include specifically requirement of maximum
components in the rule of origin of the treaties of this
kind.
Another effect resulting from NAFTA is what Parrilla,
Joseph and Berube, Alan (2013) describe in what they call
the new map of trade in North America 9.
US Business transactions through NAFTA with Mexico
and Canada went beyond what it does with Japan, Korea,
and BRICS countries combined.
This trade is done through the location of different parts
of the production process among member countries of
NAFTA.
Approximately 58% of trade conducted between the US,
Canada and Mexico, occurs in a network of 432
metropolitan areas. If it deemed to automotive,
pharmaceutical, electronics, machinery and precision
instruments, aerospace trade percentage is 69%.
The research highlights that exchange have been detected
in 15 pairs of Metro areas between the United States,
highlighting the couple Los Angeles - Mexico City, on the
rest.

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The performance of the Mexican macroeconomy in the
first 20 years of NAFTA, despite the significant increase
in trade through the exports as was mentioned, he did not
show significant results in the performance of GDP, which
experienced two contractions (1995 and 2009), two years
of zero growth (2001 and 2013) and four years of high
performance (1997, 2000, 2006 and 2010), and an average
of only 2.6% growth, enough with the high goals intended
to be produced by the (Castañeda 2013) Treaty.
The per capita GDP in the 1994/2012 period grew only
1.2% annually on average, below the results observed in
Brazil, Chile, Colombia, Peru and Uruguay, in the same
period.
Castañeda establishes an interesting reflection on labor
mobility and energy. His analysis considered what it
would have been NAFTA, with a style similar to that made
by the European Union, in the sense of resource transfers
from developed countries to the Treaty (United States and
Canada in this case) to infrastructure sectors such as
energy in Mexico , as the EU did in Italy, Spain, Portugal,
in different industries.
The investment in this sector would have been significant
and thus could have generated a more open attitude of
Washington to negotiate issues in other areas, such as
immigration.
Openness to foreign investment in energy in Mexico was
recently approved in the Peña Nieto administration, but it
is valid Castañeda’s reflection on what would have helped
if it existed at the beginning of the Treaty.
Among the macroeconomic effects of NAFTA, which are
common to the three countries, Serra Puche mentioned
the convergence of macroeconomic variables.
It highlights the evolution of two rates: inflation and

13. 13
short term interest, both with convergence trend
following the path of an asymptote.
In this sense tested for cointegration, linking linear
combinations of time series of the three countries, so as to
detect whether there is any long - term relationship. Since
1999 , a downward trend in inflation and low volatility is
observed. The same effect is proved since 1996 with
regard to interest rates short term.

14. 14
Serra Puche also highlights the synchronization of
business cycles, especially in Mexico with the United
States since 1998 when as the effects of the Tequila crisis
had been diluted.
4. Social Effects.
Among the indirect effects of social aspects, is valid the
reflection of Castaneda in "Mixed Records" about the
influence of the Treaty on indirectly prevent governments
repeat the mistakes of the past, as the debt overhang,
moving away from the mistakes of protectionism,
nationalizations, high interest rates, inflation and
exchange rate instability.
In contrast macroeconomic stability policies under the
Treaty and the close relationship with the United States,
allowed governments to offer credit to population, housing
construction and stability even in times of international
crisis.
The political opening was reinforced by the consequences
of stability derived from NAFTA, paving the way for a

15. 15
democratic transition after 69 years of permanence of a
single party in the government of Mexico.
Another aspect highlighted by Castaneda is not only the
economic opening of Mexico due to NAFTA, which helped
to steadily modernized the country, accelerating the
exchange of goods and relationships through the long
border that separates it from the United States, but also
helped diluting the ghosts of the emerging victimization of
territorial disputes and war from the nineteenth century.
However this modernization process was not complete
enough to achieve local manufacturing development in
the sense of reducing the percentage of imported inputs in
exports below 73% in 1994.
In 2013 the percentage had risen slightly to 75% not
showing substantial changes and therefore wages.
Something similar was seen in the participation of the
number of American travelers to Mexico, which remained
stable in relation to total US performing tourism abroad
during the period, the activity that generates more jobs in
Mexico.
Another angle to be considered on the effects of NAFTA
and aspects that may be pending since its
implementation, is what raised Luis Rubio (2014) 10 with
two different visions of Mexico and the impact of NAFTA.
The most visible Mexico has an outstanding performance,
which is achieved by the effects of the Treaty that brought
features of modernity, agility and as mentioned helped to
show a more competitive and growing economy, including
the transformation of state enterprises into private, free
trade, with macroeconomic variables under control, and
increased productivity.
It was also mentioned in this research, that this level of

16. 16
growth was insufficient to achieve the goals of GDP per
capita and reduced poverty levels.
Rubio elaborates on the other Mexico, which constitute an
immense amount of small businesses, which operate with
decreasing levels of productivity, low innovation and
inefficiency.
This task despite recent reforms implemented by the
Peña Nieto administration, have been insufficient, and
needs are concentrated in stimulating small businesses,
with the existence of credit accessible and regulations in
line with the need of building this other Mexico, such as
what it was achieved by large industries directly linked to
the benefits of the Treaty.
The implementation of NAFTA, led to the creation of some
programs dedicated to offset negative effects on some
sectors.
Blecker (2009) 11, interprets the shortcomings of the
Treaty in achieving established goals, are due to missing
additional policies in member countries, with emphasis on
Mexico, they reached areas such as education and
industrial issues, with adequate investment by the
government infrastructure issues.
Some of the most prominent programs were insufficient to
offset effects of the Treaty as:
1) Procampo, which refers to direct support to the field,
launched in 1993, as compensation for Mexican producers
to the competitive disadvantage caused by subsidies in
member countries of the Treaty;
2) Opportunities / Progresa: a government program
established to fight poverty in both rural and urban
communities through money transfer. Launched in 1997
as Progresa Opportunities and renamed since 2002.

17. 17
A similar perspective on the social effects of NAFTA, were
expressed by Pastor, Robert (2014) 12 saying that the
disparity of income per capita in Mexico had a significant
deterioration, mainly due to the disparity of opportunities
that had the northern regions close the exchange zone
with respect to regions that had no direct relationship
actvidades under the Treaty.
5. Demographic effects.
The issue of immigration, by Mexican citizens in the
United States, is still a pending debate between the two
nations.
It is a story with different stages, as mentioned the
Bracero program, created at the time of the First and
Second World War, was an exception to immigration laws,
and a labor option in some seasons to cover agricultural
activities and the rail industry. As a result of pressure from
Unions and groups fighting for civil rights, the program
was canceled.
The cancelation of these programs intensified illegal
immigration that was avid for opportunities.
Only in the nineties the number of Mexican citizens who
emigrated to the United States, represented 40% of the
total received during the past century.
The profile of immigrants starting from the seasonal
programs of the US government, reflected people with
relatively low educational level and only experience in
agricultural activities.
In recent decades only 5% of the immigrants were people
dedicated to agricultural activities and of that percentage
nearly two - thirds have done so illegally 13.
Until 1990 most Mexican immigrants where founded in

18. 18
the states of California and Texas.
From that date on the new immigrants settle in remote
towns from the border: Atlanta, Denver, Greensboro, New
York, Portland, Raleigh-Durham, Salt Lake City, Seattle,
Washington DC, etc.
The expected effect of NAFTA on Mexican immigration
reduction did not happened, and among the initial factors
that can be cited, the severe Tequila crisis had strong
impact on the reduction of jobs in Mexico, motivating
immigration trends.
One of the best times to be jointly developed an
appropriate immigration policy occurred during the Fox
(2000-2006) Administration in February 2001, when a
comprehensive proposal was presented to the Bush
administration.
It considered four key areas:
1) legal status for illegal immigrants,
2) a new program for seasonal workers,
3) joint measures to curb violence in the border, and
4) changes in the immigration law providing more
opportunities to Mexican workers.
The occurrence of the terrorist attacks in September 2001,
gave priority on the US agenda to internal security
matters, therefore these negotiations that were started
never had continuity through the years.
In the years after this initiative, various proposals have
been debated within the US Congress, but the issue has
not had new definitions despite the importance. The
United Nations at the beginning of the new century,
estimated that the percentage of people living in a
different country of birth was 3% of total world residents.
In the case of Mexico at that time the percentage was 9%.
In the article mentioned in Social Effects from Pastor,

19. 19
there is an elaboration on internal migration effect
naturally generated to regions offering more job
opportunities. From the contributions of NAFTA to
Mexico in terms of multiplying free trade and foreign
direct investment, they also increased the disparity, since
90% of the investments have been directed towards four
states, three of them northerners. The economies of the
northern border states have shown a growth 10 times
greater than those in the south, driving a strong
migration to the former.
One of the goals established former President Salinas de
Gortari (1988-1994), launching NAFTA meant a radical
change that would result in the issue of Mexican
immigration in the United States. The objective expressed
by Salinas de Gortari was to export goods and not people.
Growth in commodity exchange was achieved, but
something similar occurred with the entry of Mexican
immigrants. In 1994 the immigrant population born in
Mexico was of 6.2 million people. At the end of 2013, that
number doubled despite the deportation of a million
Mexicans by the Obama administration between 2009 and
2013. (Castañeda, 2014).
6. NAFTA and security issues.
The United States Mexico common border, with an area of
3,152 km, 50 official border crossings, with the existence
of four main twin cities: Tijuana-San Diego, Nogales
(Sonora) -Nogales (Arizona), Ciudad Juarez-El Paso, and
Laredo - Nuevo Laredo, make transport routes intense
trade driven by NAFTA. It is the busiest border in the
world, recorded in 1996, for example the crossing of 75
million cars, 3.5 million trucks and 254 million people 14.

20. 20
Inspection for smuggling this important traffic is not all
goods circulating cites the Washington Post (02/11/1997)
but 5% of them, approximately.
The consumer market of American illicit drugs is the
largest in the world, and the intensification of trade along
the long border with Mexico since NAFTA, has
contributed to maintaining the flow of drugs towards the
United States, as well shipment of military weapons used
by different organizations of Mexican organized crime.
The implementation of the security doctrine Bush, did not
grant priority to the issue of drug trafficking and focus
almost exclusively on the issue of internal security linked
to the terrorist threat, as happened in 2005 when the
leaders of the three countries of North America, signed
the SSP (Security and Prosperity Partnership), who share
the values of freedom, economic opportunity and the
existence of strong democratic institutions.
The issue of drug trafficking was concentrated in the
action of the security forces of the US and Mexico with
greater collaboration in the Calderon administration
(2006-2012) and a reduction of importance in the agenda
of Peña Nieto after taking office in 2012, though the
overall strategy is not very different. These concepts are
clearly expressed in the weekly geopolitical report
Stratfor of 7 January 2014 on the future of NAFTA where
it is mentioned that organized crime is a visible obstacle
that may slow foreign investment despite that Peña
Nieto’s administration has lowered the tone in its
communication strategy of internal security subjects. 15 .
7. Future of NAFTA.
Elapsed twenty years after the implementation of

21. 21
NAFTA, world trade has undergone important changes,
among which may be mentioned that 50% of it is done by
the 250 treaties that exist in different regions of the
planet.
NAFTA according to a study done by the consulting firm
KPMG "Competitive Alternatives - KPMG's Guide to
International Business Location Costs (2011), analyzing
the performance of private companies by country
highlighted Mexico’s performance, which ranked third on
the list as one of the best locations for business, from the
point of view of profitability before taxes.
Something similar but obviously linked occurs with a
study done by the Boston Consulting Group, "Competitive
Alternatives - KPMG's Guide to International Business
Location Costs (2011)", which analyzes the manufacturing
costs of the top 25 exporting economies in the world, and
Mexico also mentioned in a very favorable position,
ranking third.
These outstanding positions achieved by Mexico
undoubtedly reflect the economic integration achieved
through the Treaty.
Mexico confirms its competitive position in the outsource
of manufacturing, with the advantage that additionally
has the transportation costs, given its proximity to the US
compared to other countries, especially China, which
must also cover a tariff Most Favored Nation, that
increases their costs .
With regard to energy, in addition to global US leadership
as a producer of natural gas achieved in recent years, the
Energy Reform undertaken by Mexico in the Peña Nieto’s
administration, predicts that gas production in this
country in 2040 would be four times larger than currently,

22. 22
using reserves from the basins already detected.
The last point highlighted by Serra Puche that can help to
increase the contributions from NAFTA, together with
costs and energy elements, is the right mix of factors of
production, in the sense that the US and Canada are
major contributors of capital and Mexico is on the labor
area, supported by its competitive workforce.
This new commercial board where NAFTA is, requires
according to Serra Puche, a more active role from
governments of the three countries in the sense of
strengthening specific public policies for the better use of
the Treaty, with focus in the real competitive advantages
of the region: cost of transport, energy and the ideal
combination of factors of production.
The future performance of NAFTA also requires of
appropriate negotiations with two extra-regional
agreements that stand out for their global relevance.
The first to be considered is the Transpacific Treaty
(TTP), which opens the door to burgeoning markets of
Asia Pacific and the Americas. This Treaty involves 40%
of the world economy and a third of world trade. One
aspect that should be considered NAFTA, is not to lose
competitive advantage, with restrictions on work issues or
environment from new members extended by the TTP.
The suggestion is to do something similar to what was
done with the additional agreements on both issues when
NAFTA was launched in 1994.
According to The President Office of the US Trade
representative 16 , TPP builds on previous Treaties,
including NAFTA, in order to raise existing standards
and placing new ones that reflect current economic
realities. Improvements in standards relating to the
environment, to work, to ensure that state - owned

23. 23
enterprises compete on a commercial basis, the protection
of the free flow of digital information, to ensure protection
to 40 million Americans whose work depends on
innovation and that disputes in work areas and
Environment have adequate mechanisms.
The second Treaty to be considered and for which
negotiations are ongoing between the United States and
the European Union, it is the TTIP (Transatlantic Trade
and Investment Partnership). Mexico and Canada already
have an agreement with the European Union, and here
the challenge is to achieve convergence of the three
countries as a block, once the negotiations between the
US and the European Union have concluded.
8. Conclusions.
The launch of the NAFTA represented the most important
step towards trade liberalization in the country
, after the entry into GATT and the radical change in
economic policy from was held for decades by teh different
administrations of the PRI in Mexico.
The most important contribution of NAFTA to Mexico is
sustained process of improvements in its economy which
helped reduce the gap with the degree of development of
its partners in the Treaty.
The research work done by Lerman, Daniel-Maloney,
William & Servén, Luis (2005), showed the impact of
NAFTA on Mexico, whose exports would have been 50%
lower without the Treaty, as well as foreign direct
investment that would have reached 60% of the
contributions made. 16 .
The macroeconomic effects of NAFTA in producing
improvements in per capita income, did not have the

24. 24
expected effect.
The important Tequila crisis at the time, and other
worldwide events that affected their partners, given the
growing linkage, collaborated in not producing the
expected effects.
However the biggest impact that prevented the growth of
per capita income and poverty reduction was mentioned
earlier in the existence of two Mexicos (Rubio, Luis. 2014).
The Treaty had excellent effects on the efficiency and
overall results of large industries located in Mexico,
mainly from US, Mexican and European origin, as
research showed KPMG.
The other important part of the Mexican economy,
consisting of medium and small businesses experienced
losses of efficiency and deterioration, and thus affect
indexes mentioned of national income and poverty.
It is estimated that the degree of informality reaches 60%
of the economically active population according to the
Institute of Statistics and Geography (INEGI, 2012) 17 of
the Mexican government and 52.3% of the total
population is below the line poverty (CIA Worldfact Book).
The additional imbalance generated by the NAFTA was
due to the advantage of the northern and central states of
Mexico, due to the proximity of the main activity area
generated by the Treaty, with respect to the South, which
have historically had an economic level of lower
development.
Without any doubt the existence and consolidation of
maquiladoras already meant an advantage for states with
a shared border with the United States, but the NAFTA
granted additional opportunities for these assembly
industries.

25. 25
One of the goals pursued by NAFTA, the reduction or
containment of the migratory flow of Mexicans to the
United States, was not achieved, and instead came to
show growth as mentioned in Demographic Effects of this
paper. The main reasons are concentrated on two aspects:
1) the lack of an agreement, from the original proposal of
President Fox ,
2) the aforementioned disparity of income, labor supply,
insecurity in northern Mexico, with the growing traffic in
border areas helping to promote the search for new
opportunities. The ongoing debate on the issue is open
and deserves due attention.
Regarding security issues and NAFTA, the high degree of
capillarity of the vast northern border of Mexico, with so
many crossing points and the high level of movement of
goods and people, turns out to be very to control, opening
the door to growing business of Mexican drug trafficking
organizations in its massive illicit export and import of
military weapons for drugs operations.
The issue has not been sufficiently highlighted as an area
of alert by the countries involved in the problem, and
therefore is another subject that should be part of the
joint agenda of US-Mexico.
The future of NAFTA, will further confirm the significant
development and efficiency achieved by manufacturing
industries linked to activities of the Treaty, maintaining
or improving the competitive advantages in relation to
other countries, as indicated by the positions of leadership
in profitability and the ideal location to optimize costs.
Among the goals of the next Mexican government should
be implementing policies to extend the benefits of the
"other Mexico", and thus improve indicators of economic
health, as rising per capita income and reducing poverty

26. 26
levels a sustained manner over time.
The signing of the TTP should be another mechanism that
should help to achieve the above mentioned
improvements, given the size and diversity of the market
that make the members thereof, as well as adequate
coordination with the TTIP, through adjustments in the
existing treaty by Mexico.
Finally, NAFTA generated since its inception stronger
political ties of Mexico with the United States, and the
most obvious example occurred in the first year of the
Treaty, during the severe Mexican economic crisis in late
1994. Crisis generated by the conjunction many factors,
but within which three had much impact. The first was
the economic policy adopted that while it had reduced
levels of inflation, remained a band floating exchange rate
requiring permanent adjustment by the Bank of Mexico to
deviations, requiring sustained inflow of foreign
investment, which in situations of instability, jeopardized
the level of hard currency reserves.
TESOBONOS issuing by the Bank of Mexico, backed on
dollars, as mentioned above, helped to overcome the
severe crisis of the Tequila.
The second factor was the growing political instability
generated by the rebellion of the Zapatista insurgency in
Chiapas (January 1994), the assassination of PRI
candidate for the presidency, Luis Donaldo Colosio
(March 1994), the resignation of Interior Secretary Jorge
Carpizo McGregor (June 1994) and the assassination of
PRI president, José Francisco Ruiz Massieu (September
1994).
The third factor was the change of the economic policy of
the United States, which in 1994 had started increasing
the interest rate, and thus was becoming attractive for

27. 27
investment flows to that market. The response of the
Clinton administration to his partner in NAFTA, was
swift and successful, through his leadership in getting a
package bailout, that consisted of additional support from
the IMF, Brazil, Argentina, Chile, Colombia, the Bank
International of loans and international private banking.
In political terms the Treaty through its main
macroeconomic contributions, which among them were
the significant increase in commercial / industrial activity
linked to exports and the inflow of foreign direct
investment, helped to build the foundation for further
democratization in Mexico, within a framework of overall
stability greater than what was experienced in most of
the last century.

28. 28
Figure 1: Source: Center for the Study of Public Finance
(2009). Honorable Chamber of Deputies Congress, Mexico.
Http://www.cefp.gob.mx/intr/edocumentos/pdf/cefp/2009/ce
fp0712009.pdf

29. 29
Figure 2: Evolution of the exchange rate and the Mexican
Foreign Debt
Gráfica 3: Variaciones en las Reservas Internacionales, México
Figure 3: Changes in International Reserves, Mexico
Source: Mexican Debt Crisis 1982.
https://economics.rabobank.com/publications/2013/septem
ber/the-mexican-1982-debt-crisis

30. 30
1.Internal Font: Marquez, Graciela. (2104). "Keys of the economic history of
Mexico, the long - term performance (XVI-XXI centuries). Mexico, Fund of
Economic Culture.
2.Fuente: Vernon, Raymond. (1963). "The Dilemma of Mexico's Development:
The Role of Private and Public Sectors". Cambridge. Harvard University
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3.Hufbauer, Gary & Schott, Jeffrey. (2004). "NAFTA Revisited, Achievements
and Challenges". Washington. Institute for International Economics. US
Library of Congress.
4.Fuente:World Bank, GDP current dollars
2014,http://data.worldbank.org/indicator/NY.GDP.MKTP.CD
World Bank, Population, 2014 http://data.worldbank.org/indicator/SP.POP.TOTL
World Bank, World GDP , 2014 http://databank.worldbank.org/data/download/GDP.pdf
World Bank, World GDP, 2014 http://databank.worldbank.org/data/download/POP.pdf
5.Fuente: Douglas, Lawrence & Hansen, Taylor. ( 2003). “ Los orígenes de la Industria Maquiladora en
México”.Banco de México, Revista Comercio Exterior.
http://revistas.bancomext.gob.mx/rce/magazines/59/7/RCE.pdf
6.Fuente: Serra Puche, Jaime. (2015). "The FTA and the formation of a
region, a test from a Mexican Perspective". Mexico DF. Fondo de Cultura
Economica. Kindle Source
7. Source: Castañeda, Jorge. (2013). "NAFTA's Mixed Record, The view form
Mexico". Www.foreignaffairs.com/articles/canada/2013-12-06/naftas- mixed -
record
8. Source: Bosquin, Michael. (2014). "NAFTA at 20, The North American Free
Trade Agreement's Achievements and Challenges". California. Hoover
Institution at Stanford Junior University Leland
9. Source: Parilla, Joseph & Berube, Alan. (2013). "The New North American
Trade Map". Washington. Brookings Institute.
http://www.brookings.edu/blogs/ the -avenue / posts / 2013/11 / 07- north -
american - trade - map - grill - berube
10.Fuente: Rubio, Luis (2014). "The Two Mexicos" .USA. Project Syndicate.
http://www.project-syndicate.org/commentary/jaana-remes-and-luis-rubio-
take-issue-with-flattering-headlines-heralding-a-new-emerging-market-
success-story
11. Source: Blecker, Roberto & Esquivel, Gerardo. (2009). "NAFTA, Trade
and Development". Washington. Amercian University.
Http://www.american.edu/cas/economics/pdf/upload/2009-24.pdf
12. Source: Pastor, Robert. "North America's Second Decade". USES. Foreign
Affairs. Jan / Feb issue.
13.Hufbauer, Gary Clyde - Moran, Theodore & Oldenski, Lindsay, assited by
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R & D and Jobs: Implications for US Policy". Washington. Peterson Institute
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14. Source: International Criminal Justice Review. (2005). "The Management

31. 31
of Border Security in NAFTA: Imagery, Nationalism and the War on Drugs".
http://libarts.wsu.edu/isic/research/pdf/border-security-nafta.pd
15. Source: Stratfor. (2014). "NAFTA and the Future of Canada, Mexico and
the United States". Washington. https://www.stratfor.com/weekly/nafta-and-
future-canada-mexico-and-united-states
16. Source: Lederman, Daniel-Malonet, William & Servén, Luis. (2005).
"Lessons from NAFTA for Latin America and the Caribbean". Washington.
The International Bank for Reconstruction & Development-The World Bank.
17. Source: El Economista, Mexico. (2012).
http://eleconomista.com.mx/industrias/2012/12/11/mas-29-millones-trabajan-
informalidad-inegi
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