Mexico’s NAFTA: More Pros than Cons

This briefing by the South African Institute of International Affairs (SAIIA) evaluates the impact of the North American Free Trade Agreement (NAFTA) on Mexico ten years after its 1994 implementation. The author argues that while the agreement created significant challenges for certain sectors—particularly agriculture—it has been an empirical success in terms of trade, investment, and macroeconomic stability, providing a case study for the South African Customs Union (SACU).

• NAFTA is described as an empirical success regarding trade and investment, contributing to Mexico's rise from the 15th to the 9th largest economy in the world by 2001. Per capita income increased by 24% since 1993 to over $4000, and exports grew by 300%.
• The agreement provided Mexico with critical political and financial credibility, which facilitated a rapid recovery from the 1995 Tequila Crisis. This affiliation encouraged US lenders to extend credit and promoted long-term macroeconomic stability.
• NAFTA drove significant industrial diversification in Mexico, shifting the export base away from oil. In the 1980s, oil made up 70% of total exports ($10 billion), but by the time of the report, it represented only about 7% of $160 billion in exports, with growth seen in transportation equipment, electronics, and textiles.
• The Maquiladoras (assembly plants) were boosted by NAFTA, employing 5% of the labour force and accounting for 95% of manufactured exports. However, they are criticized as unsustainable because they add as little as 3% local content to final products and have not evolved beyond simple assembly.
• The agreement had detrimental effects on the agricultural sector due to a lack of asymmetrical tariff reductions. Critics claim the influx of subsidized US products displaced approximately two million maize farmers.
• The negotiation process was rushed and imbalanced, with Mexico lacking the resources and experience to properly analyze the agreements. This resulted in gains in market access and investment ratings overshadowing the need for special and differential treatment (SDT) and the management of non-tariff barriers.

APA

White, L. (2004). Mexico’s NAFTA: More Pros than Cons. South African Institute of International Affairs. https://saiia.org.za/wp-content/uploads/2010/08/tpb4.pdf

Chicago

White, Lyal. Mexico’s NAFTA: More Pros than Cons. South African Institute of International Affairs, 2004. https://saiia.org.za/wp-content/uploads/2010/08/tpb4.pdf.

Wikipedia

{{cite report |last1=White |first1=Lyal |title=Mexico’s NAFTA: More Pros than Cons |publisher=South African Institute of International Affairs |date=January 2004 |url=https://saiia.org.za/wp-content/uploads/2010/08/tpb4.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{white2004mexicos, author = {White, Lyal}, title = {{Mexico’s NAFTA: More Pros than Cons}}, institution = {South African Institute of International Affairs}, year = {2004}, month = jan, url = {https://saiia.org.za/wp-content/uploads/2010/08/tpb4.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }