NAFTA at 20 (The Economist, January 4

th
2014)
Between 1993 and 2012, there was a great leap of trade between America and Mexico
(506%), compared with 279% in non-NAFTA countries.
Fears that Mexico will hoover up American jobs never materialized- more jobs went to China
then Mexico. In 2015, Mexico will have a cost advantage over China of almost 30%.
For the first six years, cross-border investment ballooned. Rapid growth led to the three
countries share of global production hitting a peak of 36% in 2011.
Industries from aerospace to cars have woven supply chains back and forth across North
Americas borders.

Mexico, an emerging market hitched to two larger, rich ones- has been NAFTAs biggest
beneficiary:
Import competition has improved Mexican manufacturing productivity
Foreign direct investment into the country has surged
Membership of NAFTA has shored up Mexicos domestic political commitment to open
markets
Provided template for other free-trade agreements (14 and counting)

But for all its promise, NAFTA had failed to close the development gap between Mexico and
the US. Momentum of the biggest gains in trade has also waned in recent years. Trade
infrastructure is badly in need of an upgrade and outmoded regulatory structures that now
seem overly restricting need to be reformed. There are inconvenient hours of waiting at the
border of Mexico and US, where trade takes place on railway lines and in lorries,
NAFTA could also do more to avert the negative effects of regional trade deals. NAFTA risks
diverting trade from countries outside the club to those inside it.
NAFTA should show how regional deals can be bridges to wider liberalization (US, Canada
and Mexico should not pursue FTAs with European Union separately)
Mexico has signed FTAs with over 44 countries since NAFTA was set up, and this attracts
expanding supply chains and companies into the country.
NAFTA also protects the intellectual-property arrangements that is hard to guarantee when
dealing with China; it has enforceable commitments on copyrights, patents, trademarks and
trade secrets.
US, Canada and Mexico should look to expand NAFTA- inviting new members from Central
America, the Caribbean and Latin American, to be a proponent of free trade across all the
Americas.
Two fifths of Mexicans are under 20. Its labour force is expected to grow by 58% in 2030.
The shale-gas revolution, development of Canadas oil sands, and a constitutional change in
December allowing private firms to invest in Mexican energy could give industries supplies
of low-cost energy.
Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership could
undermine Mexicos trade advantages within North America, because they would allow
other countries low-tariff access to the United States. But the whole region may be better off,
if they help promote regulatory harmony and trade in services.