Effects in Trade and Industrial Development
From a more detail analysis, we can see that in actual trade numbers, the total amount of transactions between United States, Canada and Mexico is growing approximately 130% for the 10-year periods between 1994 to 2004. Nevertheless, other analysis also indicated that trade number between NAFTA and non-NAFTA countries also increased by approximately 125% during the same period. This displayed the small effect of NAFTA. The predicted change of trade route from non-NAFTA countries to NAFTA countries did not rally take place.
In other words, NAFTA did not encourage its member to enhance trade with each other except in a minimum amount (‘After NAFTA’, 2004. Hufbauer, 2005). Observing how NAFTA influences different industries in the North American continent, we could conclude that NAFTA did not presented the expected influence toward trade activities. Some industries in Mexico that import raw materials and export finished good even grew much faster before the NAFTA compare to after the agreement took place.
The only industry that has obviously delivered positively enhanced performance after the agreement is the automotive industry. The automotive industry of Mexico has been successfully integrated with that of Canada and the United States. Another sector that has been positively influenced by NAFTA is the retail industry, in which the countries improved their cooperation in bilingual labeling of products for distributions in the three member nations (Chang, 2002).
IV. 2. 2. Effects in Private Businesses The overall analysis of NAFTA effects indicated that the agreement did not satisfy many people that expected positive economic results. For instance, the elimination of trade barriers and business barriers between the United States and Mexico causes American companies to change their minds and went to Mexico where cheap labors are easier to find.
This created a large question mark in the minds of American workers, especially which companies moved to Mexico. Instead of giving them jobs, NAFTA divert the job which they suppose to have into Mexico or other NAFTA region which have cheaper labor. This goes for various industries like the airline industry, retail industry, electronic industry, IT industry, etc. Companies of these industries are attracted to the lower cost structure of Mexico (‘After NAFTA’, 2004).