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NAFTA Overview and Its Effect on Undocumented Immigration

NAFTA stands for the North American Free Trade Agreement and it is a Preferential Trade Agreement (PTA) between the United States, Mexico, and Canada.  A PTA is an agreement between a group of countries to levy low or zero tariffs against imports from members. 

NAFTA took effect in January of 1994, and at the time, it was a hotly debated issue.  Those who supported the agreement argued that it would allow for cheap foreign goods to be imported by the United States, which would help to stimulate foreign economies, and contribute to globalization. 

Those who opposed NAFTA were mainly labor unions that feared lost jobs and lower wages for American workers; environmental groups who feared dirty industries; and some politicians who feared that firms would relocate to Mexico because they were having trouble selling their goods domestically. (32)  One of these concerns is expressed through the cartoon below: 

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Aside from these issues, how does NAFTA apply to undocumented immigration?  When first proposed, NAFTA was supposed to be the quick fix for Mexicans illegally crossing the border and heading for the United States.  The predicted growth of the Mexican economy was supposed to be enough to create more competitive jobs in Mexico, and thus reduce the incentive for migration, but this has not been the case.  The rise of undocumented immigration since NAFTA was established can be attributed to a few factors:

Along with the reduction of tariffs, NAFTA also allowed for the United States to grant large subsidies to American farmers.  In doing so, American farmers were then able to export agricultural goods at a much lower price, undermining the Mexican farmers who had previously been reliant on exports to the United States.  This pushed many Mexican farmers off the land, and encouraged them to flee to the United States illegally. (33)

Secondly, NAFTA’s tariff reductions allowed for certain big American firms, such as Wal-Mart, to enter the Mexican market, and their lower prices also drove many Mexicans out of work, to the tune of 28,000 small businesses eliminated. (34)

In the end, the argument over the success of NAFTA is just as heated of a debate as the one over its implementation.  The agreement certainly established free trade, which both sides of the debate would agree is a great thing.  Free trade allows countries to specialize in a certain area, and then import the goods they don’t produce at lower prices.  But what happens to the workers in the industry for which a country imports?  The displacement of U.S. workers in the manufacturing industry and Mexican workers in the agricultural industry leads to many questions about the general benefits of NAFTA and how it should influence future policy decisions.

The United States enters a new Preferential Trade Agreement with increased frequency, and in 2004, the Dominican Republic-Central America Free Trade Agreement (CAFTA) was agreed upon.  This established free trade with Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and the Dominican Republic. (35)  Currently, throughout much of Latin American there is free trade and therefore, the United States will most likely see a continued rise in the amount of undocumented immigration by Latin Americans driven out of their respective jobs.