Political Technical and Legal Environment

NAFTA

The North American Free Trade Agreement (NAFTA) was enacted in November of 1993 with the objective to facilitate the free flow of goods, services and labor between the United States, Canada and Mexico. NAFTA was not only used to eliminate tariffs between the relevant countries but it also addressed issues such as transportation, border restrictions, as well as environmental issues between the participating countries Although NAFTA required some tariffs to be dropped immediately others are subject to a fifteen year grace period. NAFTA addresses many other issues than tariffs as well as acts to open protected sectors in agriculture, energy, automotive trade, and textiles. NAFTA also establishes an international agreement on intellectual property rights.

Political Issues

There are several political issues that arouse from the passing of NAFTA. One issue that constantly gains the media's attention is its effects on jobs. For example, labor in Mexico is significantly cheaper than labor in the U.S. Therefore many citizens of the U.S. feel as if their jobs have been replaced by Mexican labor under the deal (Levi, 2009). Another issue that is consistently mentioned is boarder control and the smuggling of illegal immigrants across borders. Another issue has been the impact upon Mexican farmers. The U.S. subsidizes its agricultural industry heavily which makes the price for U.S. crops less than what Mexican farmers can produce. As a result many Mexican farmers have been forced to stop growing crops and as a result have implications for the border control issue as well.

Legal Issues

There are a plethora of legal issues that have arisen as a result of NAFTA. Since all the participating countries have different legal systems, conflict resolution in regards to trade has been a challenge at times. If a Mexican company feels that the product's imported from the U.S. didn't meet the required specifications then rectifying the situation through international courts can be a tedious proposition for them. Another issue regards product dumping restrictions or lack thereof (Macrory, 2002). Since some industries in the countries receive subsidies for their government then this artificially alters the price of the product. U.S. agricultural products are actually cheaper than Mexican produced crops as a result of this and therefore it doesn't necessarily represent a free trade agreement with respects to this industry. However rectifying such situations represents a series of tremendous legal obstacles from the various governing bodies.

Technical Issues