Three years after the North American Free Trade Agreement (NAFTA) created the largest free trade area in the world, the debate rages on. Critics say NAFTA is a failure that its member countries the United States, Mexico and Canada should abandon. Its a trade agreement from hell, according to the consumer group Public Citizen. Supporters call NAFTA a success and want it to expand across Latin America. Former Commerce Secretary and U.S. Trade Representative Mickey Kantor calls it a win-win situation for everyone.Opinions grow particularly heated when the focus turns to the United States and Mexico. By the time NAFTA went into effect Jan. 1, 1994, the United States and Canada already had five years of experience with the Canada-U.S. Free Trade Agreement. Provisions under that agreement continued basically unchanged for the two developed nations under NAFTA. Mexico, on the other hand, was a developing country where such issues as lower labor costs, illegal immigrants and environmental problems created a target for NAFTA opponents. Many analysts say its too early to judge NAFTAs impact on U.S.-Mexico trade, in part because many of its provisions have yet to take effect. While some tariffs and nontariff barriers were eliminated immediately, others phase out gradually through 2008. More important, trade agreements are directly influenced by macroeconomic changes in individual countries and globally, such as changes in income and exchange rates. In Mexicos case, the peso devaluation during NAFTAs infancy in late 1994 plunged the country into a severe recession and sharply altered trade flows. A clear-cut assessment of NAFTA also is difficult because many of Mexicos trade liberalization policies were in effect before NAFTA began, prompted by Mexicos membership in the General Agreement on Tariffs and Trade (GATT) and its ongoing domestic reforms. It is important to realize that NAFTA is not the opening up of Mexico, said Jonathan Heath, a Mex...
