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The Effects of NAFTA: Outsourcing to Mexico and the Mexican-American Border


The Effects of NAFTA: Outsourcing to Mexico and the Mexican-American Border

Globalization of economies is usually though about in a positive light; bringing the world together results in more trade, positive relationships among nations, and booming economies. However, globalization is not always beneficial to those involved. In January of 1991, President Bill Clinton signed into effect the North America Free Trade Agreement, or NAFTA. This agreement lifted trade barriers and tariffs among the United States, Mexico, and Canada (Gonyea, 2013). Although the agreement involved all three North America countries, critics and supporters of the agreement have focused only on the effects it has had on the United States and Mexico, leaving Canada out of the argument. NAFTA may have intended to produce positive effects and it has been beneficial in some aspects but there are also been many negative effects of the treaty on both Mexico, the United States and the citizens of these countries.

In the early 1990s, when the NAFTA was being negotiated, there was strong support as well as strong opposition for the treaty in both the United States and Mexico (Oliver, 2007). One of the major groups who protested the implementation of NAFTA was the United Auto Union, or UAU. Since the passage of NAFTA, the UAU has dropped to half its pre-NAFTA size (Gonyea, 2013). The goals of the United Sates when drafting NAFTA were to achieve economic growth, become more competitive in the global market, and to implement Democratic principles in Mexico. Another goal of the United States was to strengthen the Mexican economy therefore lessening the appeal for Mexicans to immigrate to America (Oliver, 2007). Mexico’s goals were to eliminate the idea that they have been submissive to the United States and to secure access to the American Market (Oliver, 2007). Prior to NAFTA, the United States had already had trade agreements with Canada and Mexico was the third largest trade partner of the United States (Oliver, 2007). With this being true, one can argue that almost all of the goals of NAFTA were already fulfilled before NAFTA took effect.

It's Not All Bad

One major business in America that took advantage of NAFTA was General Motors, who moved many jobs to Mexico. General Motors built a motor vehicle manufacturing plant in Silao, Mexico in the early 1990s as NAFTA was being negotiated. The plant was completed and opened in 1996 and employs about 17,000 Mexican workers from small surrounding villages (Estey, 2012). The plant is open twenty-four hours a day, seven days a week and workers must work twelve hour shifts. Workers make the equivalent of sixty U.S. dollars per week. A man who helped build the plant refused to work for General Motors because for him, the pay was too little for the amount of work. The people of Silao are not thrilled about the General Motors plant and many of them prefer to work as street vendors than to work in the plant (Estey, 2012).

Mexican manufacturing employees make 1/5 the wages of an equivalent American manufacturing employee (NAFTA Turns Ten, 2004). Companies such as General Motors have used NAFTA to cut manufacturing costs and therefore the cost of goods sold, resulting in increased profits.

The result of America companies outsourcing to Mexico have been negative for the people of both countries and positive for big businesses. One out of every six workers in the manufacturing sector in the United States has lost their job since NAFTA was implemented. The number of jobs lost in the United States from 1993-2002 resulting from the NAFTA trade deficit is estimated at 879,280 (NAFTA Turns Ten, 2004). As jobs have been lost in America, jobs have been created in Mexico; however, the working conditions and treatment of Mexican workers has not improved. As mentioned earlier, workers in Mexico work long hours for little pay. It is estimated that 25,000,000 Mexicans are living in extreme poverty (NAFTA Turns Ten, 2004). According to Koechlin and Larudee, there is no enforcement of fair labor practices in Mexico to protect the rights or safety of the workers (1993). Gonyea has referred to NAFTA as a “race to the bottom” because of the negative effects NAFTA has had on laborers in both Mexico and America (2013). Fernandez-Kelly and Massey stated that one of the objectives of NAFTA was to close the wage gap between Mexico and America (2014). This clearly has not happened.

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In addition to the workers losing out in both countries, NAFTA has not helped diminish the number of Mexicans crossing the border to the United States. Before and after the implementation of NAFTA, Mexico has been the world’s largest source of emigration and the United States has been the world’s largest place of immigration (Fernandez-Kelly & Massey, 2014). Although those involved in writing and passing NAFTA into effect believed that the treaty would reduce the amount of Mexicans coming to America by creating job opportunities in Mexico, NAFTAs supporters did not take into account factors which influence emigration other that jobs and economics. Factors which still have an effect on Mexican emigration despite the passage of NAFTA include: lower wages in Mexico, more crime in Mexico, low standards of living in Mexico, distrust/corruption of the Mexican government, and the inability of the Mexican government to create enough jobs for the amount of people who need jobs (Fernandez-Kelly & Massey, 2014). The number of undocumented Mexicans currently living in the United States is estimated to be 4,800,000 and the number of U.S. border patrol agents since NAFTA came into effect has increased by 50% (NAFTA Turns Ten, 2004). These are not signs that immigration has decreased since NAFTA.

Koechlin and Larudee suggest that what is missing from NAFTA is the enforcement of fair labor practices in Mexico and trade adjustment assistance compensation (1992). This means that in America, since jobs have been lost and big business have been making more profits due to the decrease in labor costs, these big businesses should be taxed. This money would go to workers who have been displaced as a result of NAFTA and would therefore elevate the suffering on America’s end of NAFTA (Koechlin & Larudee, 1992). This may help America, but it still leaves Mexican workers to suffer through terrible working conditions and still makes coming to America ideal for Mexicans. Perhaps Mexico is not ready for a free trade agreement, both America and Mexico may have been better off before the treaty took effect. If in fact the wage gap had closed between Mexico and America, working conditions were acceptable in Mexico, and workers displaced by NAFTA were compensated for their lost wages, the treaty would have been a great step towards globalization. However, it seems that in this case globalization and free trade has done more harm than good.

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Estey, M. (2012, December 18). NAFTA from a mexican point of view. PRI. Retrieved from

Fernandez, K. P. & Massey, D. S. (2007). Borders for whom? The role of NAFTA in mexico- u.s. migration. Annals of the American Academy of Political and Social Science, 610(1). 98-118.

Gonyea, D. (2013, December 17). What has NAFTA meant for workers? The debate’s still raging. NPR. Retrieved from

Koechlin, T. & Larudee, M. (1992). The high cost of NAFTA. Challenge, 35(5). 19-26.

NAFTA turns ten 1994-2004. (2004). NACLA Report on the Americas, 37(4). 6-39.

Oliver, R. S. (2007). In the twelve years of NAFTA, the treaty gave to me… What exactly?: An assessment of economic, social, and political developments in mexico since 1994 and their impact on Mexican immigration into the united states. Harvard Latino Law Review, 10(1). 53-133.

Source by Gillian Cofey

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