1. Mexico, NAFTA, and Expansion Toward the European Union
and South America by
Eduardo Segarra, Texas Tech and Texas A&M
and
Nicolas Gutierrez, ITESM

2. Mexico: Joining the World Economy
The crisis of large public deficit
- lack of foreign investment
- large foreign debt
- high inflation
At this time was when Mexican views with
respect to international relations and
international interdependence began to change

3. Economic policies of the 1980s in Mexico
-- “Economic Realism,” 1982
-- “Increased Economic Realism,” 1986
-- “Economic Solidarity Pact,” 1987
Key components
- liberalizing international trade
- strengthening fiscal policy
- privatization of public sector enterprises
- financial sector liberalization
- liberalization of foreign investment
- deregulation of the economy
Key milestone
- In 1986 (as part of the “Increased Economic Realism”
policy) Mexico joined GATT and became it’s 92nd
member

4. Since the early 1990s the Mexican Government has struggled to become a “facilitator” for economic activity to take place, rather than being an “active” participant in economic activities taking place

5. Mexico has never seen the enactment of free trade agreements as “the solution” to it’s economic problems, but has embraced these as an important factor which complements the Mexican government’s overall strategy to induce economic growth and stability
- Increase exports
- Improve input availability
- Increase investment
- Generate more and better employment opportunities

6. From the early 1980's to today, there is evidence that the Mexican government has consistently intensified “international trade liberalization” efforts during though economic times:
- Crisis of 1982 to Mexico joins GATT
- Lack of progress in GATT negotiations in the late 1980's leads to NAFTA
- Slow progress in GATT negotiations in the early-to- mid-1990's, the crisis of 1994, and Seattle’s WTO happenings in early lead to and sped up Mexico - E.U. FTA and Mexico-Israel FTA

8. Time Line of Mexico’s Free Trade Agreements
1992
Chile I
1994
NAFTA
Canada
& U.S.A.
1995
Bolivia
Colombia
Costa
Rica
Venezuela
1998
Nicaragua
1999
Chile II
Uruguay
2000
Brazil
(Autos)
E.U.
Israel
Expected in 2001: El Salvador, Guatemala and Honduras
In the works: Argentina, Paraguay, Peru, Ecuador, Panama,
Trinidad & Tobago, and Japan

10. Growth of Mexican Exports
Within NAFTA
( )
1999 = $2.31 billion
1999 = $ billion
To Canada
48%
To the U.S.
181%

11. Growth of Mexican Imports
Within NAFTA
( )
1999 = $2.94 billion
1999 = $ billion
From Canada
150%
From the U.S.
132%

12. Growth of Mexican Exports with Latin American Countries
Since Adoption of FTAs
with Latin American Countries
Nicaragua, 14%
Venezuela, 157%
Costa Rica, 159%
Colombia, 23%
Chile, 199%
Bolivia, 131%

13. 38,175
21,447
Color 1 = Companies with more than $5 million worth of exports
Color 2 = Companies with less than $5 million worth of exports

14. Accumulated Foreign Investment
January, 1994-December, 1999
$70.86 billion

15. FTAs’ goals with respect to agriculture
- Promote growth
- Promote rural development
- Improve competitiveness
- Promote investment and technology transfer
- Improve marketing infrastructure
- Promote value added activities

18. Growth of Agricultural Exports (1993-1999) = 93%

19. Growth of Agricultural Imports (1993-1999) = 48%
Growth of Industrial Imports ( ) = 115%

21. Growth = 72%
*January - May

22. Growth = 53.5%

24. Areas of research needing attention
Linkages of FTAs impacts in agriculture as related to:
- Income distribution (individual and regional)
- Regional rural development impacts and prospects
- Technology adoption/environmental issues/sustainability
- Labor issues and unemployment/underemployment