But unions and consumer protection groups say NAFTA has had a negative impact in Mexico and the United States. They say outsourcing and the resulting drop in wages have hurt the U.S. national economy and Mexico`s rural industry has destabilized. “When everyone touts the benefits of foreign investment, they ignore the fact that domestic investment has been squeezed out,” Wise said. “Investment in the economy has been well below the level needed for dynamic growth. In China, they are investing 35 percent in dynamic growth, and economists say it takes 25 percent or more. Mexico is at 19 percent. Overall, Canada has become more dependent on trade with the United States, accounting for 75% of its exports to its southern neighbour. Other high-income countries tend to be much more diverse, rarely relying on a single partner for more than 20%. ==External links==Presidents have long had cordial relations with Canadian prime ministers, but Trump has not hesitated to use this dependency as a means of pressure.
Following USMCA negotiations, he threatened new tariffs on Canadian auto parts if Ottawa did not accept trade concessions. The United States had already signed a free trade agreement (FTA) with Canada in 1988, but the addition of a less developed country like Mexico was unprecedented. Opponents of NAFTA have raised the wage gap with Mexico, which had a per capita income of only 30% [PDF] compared to the United States. U.S. presidential candidate Ross Perot argued in 1992 that trade liberalization would lead to a “huge sucking noise” from U.S. jobs fleeing across the border. Supporters such as Presidents Bush and Clinton countered that the deal would create hundreds of thousands of new jobs a year, while Mexican President Carlos Salinas de Gortari saw an opportunity to modernize Mexico`s economy to “export goods, not people.” The North American Free Trade Agreement (NAFTA) was a tripartite agreement negotiated by the governments of Canada, Mexico and the United States and entered into force in January 1994. NAFTA eliminated most tariffs on products traded between the three countries, with a focus on trade liberalization in agriculture, textiles and automotive manufacturing.
The agreement also aimed to protect intellectual property, establish dispute settlement mechanisms, and implement labour and environmental protection measures through subsidiary agreements. NAFTA has been complemented by two other regulations: the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labour Cooperation (NAALC). These tangential agreements were aimed at preventing companies from migrating to other countries to take advantage of lower wages, softer health and safety regulations for workers, and more flexible environmental regulations. On the other hand, critics of the deal argue that it is responsible for job losses and stagnant wages in the United States, due to low-wage competition, companies moving production to Mexico to cut costs, and a growing trade deficit. Dean Baker of the Center for Economic and Policy Research (CEPR) and Robert Scott of the Economic Policy Institute argue that the increase in NAFTA imports in two decades has resulted in the loss of up to six hundred thousand jobs in the United States, although they admit that some of this import growth would likely have occurred even without NAFTA. “I don`t think NAFTA was created to alleviate all the social problems in Mexico. He couldn`t and didn`t,” Gutiérrez said. “I think Mexico`s situation would be worse if it hadn`t been for NAFTA today. Many analysts explain these divergent results by pointing to the “two-speed” nature of the Mexican economy, in which NAFTA has spurred growth in foreign investment, high-tech manufacturing and wage growth in the industrial North, while the largely agrarian South has remained detached from this new economy.
University of Pennsylvania economist Mauro Guillen has argued that growing inequality in Mexico is due to the fact that NAFTA-oriented northern workers receive much higher wages through trade-related activities. From the beginning, NAFTA`s critics feared that the agreement would lead to the relocation of American jobs to Mexico despite the complementarity of the NAALC. NAFTA, for example, has affected thousands of American autoworkers in this way. Many companies have moved their production to Mexico and other countries where labor costs are lower. .