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International Trade and Finance

Notes NAFTA-related environmental threats instead occurred in specific areas where government
environmental policy, infrastructure, or mechanisms, were unprepared for the increasing scale of
production under trade liberalization. In some cases, environmental policy was neglected in the wake
of trade liberalization; and measures against non-tariff trade barriers, threatened to discourage more
vigorous environmental policy. The most serious overall increases in pollution due to NAFTA were
found in the base metals sector, the Mexican petroleum sector, and the transportation equipment
sector in the United States and Mexico, but not in Canada.
Agriculture

From the earliest negotiation, agriculture was (and still remains) a controversial topic within NAFTA,
as it has been with almost all free trade agreements that have been signed within the WTO framework.
Agriculture is the only section that was not negotiated trilaterally; instead, three separate agreements
were signed between each pair of parties. The Canada-U.S. agreement contains significant restrictions
and tariff quotas on agricultural products (mainly sugar, dairy, and poultry products), whereas the
Mexico-U.S. pact allows for a wider liberalization within a framework of phase-out periods (it was
the first North-South FTA on agriculture to be signed).
The overall effect of the Mexico-U.S. agricultural agreement is a matter of dispute. Mexico did not
invest in the infrastructure necessary for competition, such as efficient railroads and highways, which
resulted in more difficult living conditions for the country’s poor. Mexico’s agricultural exports
increased 9.4 percent annually between 1994 and 2001, while imports increased by only 6.9 percent a
year during the same period.
One of the most affected agricultural sectors is the meat industry. Mexico has gone from a small-key
player in the pre-1994 U.S. export market to the 2nd largest importer of U.S. agricultural products in
2004, and NAFTA may be credited as a major catalyst for this change. The allowance of free trade
removed the hurdles that impeded business between the two countries. As a result, Mexican farmers
have provided a growing meat market for the U.S., leading to an increase in sales and profits for the
U.S. meat industry. This coincides with a noticeable increase in Mexican per capita GDP that has
created large changes in meat consumption patterns, implying that Mexicans can now afford to buy
more meat and thus per capita meat consumption has grown.
Mobility of persons
According to the Department of Homeland Security Yearbook of Immigration Statistics, during fiscal
year 2006 (i.e., October 2005 through September 2006), 73,880 foreign professionals (64,633 Canadians
and 9,247 Mexicans) were admitted into the United States for temporary employment under NAFTA
(i.e., in the TN status). Additionally, 17,321 of their family members (13,136 Canadians, 2,904 Mexicans,
as well as a number of third-country nationals married to Canadians and Mexicans) entered the U.S.
in the treaty national’s dependent (TD) status. Because DHS counts the number of the new 1-94
arrival records filled at the border, and the TN-1 admission is valid for three years, the number of
non-immigrants in TN status present in the U.S. at the end of the fiscal year is approximately equal to
the number of admissions during the year. (A discrepancy may be caused by some TN entrants
leaving the country or changing status before their three-year admission period has expired, while
other immigrants admitted earlier may change their status to TN or TD, or extend TN status granted
earlier).

Self-Assessment
1. Choose the correct options:
(i) Regionalism can be studied from any of the following perspectives EXCEPT
(a) Functional regions. (b) Non-governmental regions.
(c) Formal regions. (d) Vernacular regions.
(e) None of the above.

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