1. NS3040 Fall Term 2018 Pre-NAFTA Assessment
Federal Reserve Bank of Chicago, Strong Dollar Weak Dollar

2. NAFTA Cost/Benefits U.S. I
Stephen Stamos, Reflections on the Proposed U.S.-Mexico Free Trade Agreement, 1993
U.S. Perspective
Positive aspects
U.S. firms have better access to cheaper labor/parts
Increased access to growing export markets
Liberalized foreign investment laws in Mexico
Expansion of financial and services sectors to México
Mexico becomes a very reliable sure of petroleum
Enhance Mexico’s political stability
Overall a net employment gain
Increase the competitiveness of U.S. firms
Assist U.S. banks in resolving Mexico’s debt service
Ease immigration pressures

3. NAFTA Cost/Benefits U.S. II
U.S. Perspective
Negative Aspects
Employment loss in select industries and regions
Forced restructuring in sectors like agriculture
Downward pressure on U.S. wages/standard of living
Increased competition for small-medium sized firms
Uneven regional impact

4. NAFTA Cost/Benefits Mexico I
Free Trade for Mexico
Positive aspects
Increased direct private foreign investment
Repatriation of “flight capital.”
Increased economic growth
Increased Export Growth
Increased diversification of the economy
Increased employment and Income
Increased expansion of the internal market
Promote a more modern and open economy

5. NAFTA Cost Benefits Mexico II
Free Trade for Mexico
Negative Aspects
Increased integration with the U.S. Economy – increased vulnerability
Worker and community Issues: health, safety and the environment
Child labor laws and regulations
The adjustment realities for Mexican firms
The changing structure, composition and composition of production in Mexico
Uneven regional economic impact – Northern border versus other areas
A challenge to Mexico’s historic nationalism
Compromises future policy options in terms of the external debt situation

6. NAFTA Cost Benefits Mexico III
Real Questions for Mexico
Re-examination of the positives
Will capital flight return?
Will wages (real income) increase?
Will domestic markets expand?
Will the pace of immigration slow?
Will foreign investment flow significantly to where it is needed?
What will be the character of a more open and modern economy that is driven by export-led growth?
Will the lost standard of living of the 1980s be regained for those who lost it?

7. NAFTA Cost Benefits Mexico IV
The Real Questions for Mexico
A Re-examination of the negatives
Will the negatives be even worse than imagined?
What kind of protections can be built into the agreement to seriously address genuine negatives
Final Thoughts
NAFTA obviously inevitable
When U.S. economy strong the positive economic influences will be more self evident, especially in the Northern border states
While economic benefits for parts of Mexico obvious, for Salinas NAFTA a essential part of his neoliberal reforms to bring Mexico into the global economy.