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The Economic Benefits of NAFTA to the United States and Mexico

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Abstract:

Prior to the 1980s, high import tariffs and quotas characterized Mexico's international trade policy, along with restrictions on foreign investment and ownership. But following a severe economic crisis in the early 1980s, the country began liberalizing its protectionist policies. In the years since, Mexico has implemented 11 free trade agreements - with the European Union, countries in South and Central America, Japan and, most importantly, the United States and Canada. The 1994 North American Free Trade Agreement (NAFTA) between Mexico and its two northern neighbors eliminated the majority of taxes on products traded among the countries, and called for a gradual phase-out of other tariffs. Although there have been calls to renegotiate or suspend NAFTA, after nearly 14 years under the treaty it is clear that both Mexico and the United States have benefitted from more open trade.