Other ancillary agreements have been adopted to allay fears about the potential impact of the Treaty on the labour market and the environment. Critics feared that, in general, low wages in Mexico would attract U.S. and Canadian companies, leading to a relocation of production to Mexico and a rapid decline in manufacturing jobs in the United States and Canada. Meanwhile, environmentalists were worried about the potentially disastrous effects of rapid industrialization in Mexico, which has no experience in implementing and enforcing environmental legislation. Potential environmental issues were addressed in the North American Agreement on Environmental Cooperation (NAAEC), which established the Commission for Environmental Cooperation (CEC) in 1994. Mexico`s first steps toward opening up its closed economy focused on reforming its import substitution policy in the mid-1980s. Further reforms were undertaken in 1986, when Mexico became a member of the General Agreement on Tariffs and Trade (GATT). For example, Mexico has agreed to lower its maximum tariffs to 50% as a precondition for GATT membership. Mexico went further, lowering its highest tariff rate from 100% to 20%.
Mexico`s weighted average tariffs fell from 25% in 1985 to about 19% in 1989.6 Other studies indicate that NAFTA was disappointing in that it was not possible to significantly improve the Mexican economy or reduce the income gap between Mexico and its northern neighbours.65 that NAFTA has not been complemented by complementary measures that could have fostered further regional integration. This policy could have contained improvements in education, industrial policy and/or infrastructure investment66 after accession to THE GATT, the Mexican government adopted in 1989 the final decree liberalizing the rules of industry, but not abolishing them completely. At the time of the NAFTA negotiations, automakers were still required to have a certain percentage of domestic content in their products and to meet export requirements, both of which were seen as major barriers to the sector. In addition, Mexico had tariffs of 20% or more on imports of automobiles and auto parts. These restrictions were lifted under NAFTA. In 1984, Congress passed the Trade and Customs Act, which gave the president the power to negotiate free trade agreements. It only allowed Congress the option of approving or rejecting, and it could not change the negotiating points. For Mexico, a free trade agreement with the United States was a way to ensure reforms to its market-opening measures from the mid-1980s onwards in order to transform Mexico`s formerly statist economy after the devastating debt crisis of the 198088 years. implement open economic reforms in the market and stimulate imports of goods and capital. Promotion of increased competition in the Mexican market.
A free trade agreement with the United States has been a way to block domestic efforts to reverse Mexican reforms, particularly in the politically sensitive agricultural sector. NAFTA has helped to deflect the protectionist claims of Mexican industrial and interest groups.9 9 One of the Mexican government`s main objectives was to strengthen investment confidence in order to attract greater foreign investment flows and stimulate economic growth. Since NAFTA came into force, Mexico has used the agreement as a basic model for other free trade agreements Mexico has signed with other countries.10 Because, in a way, Mexico beats the United States at the border. Prior to NAFTA, the trade balance between the two countries was modest in favour of the United States. In 2018, Mexico sold the United States more than $72 billion more than it bought from its northern neighbor. NAFTA is a huge and extremely complicated market. Looking at economic growth can lead to one conclusion, while looking at the trade balance leads to another. . . .