The deal officially became “the law of
The idea and policy implementation of economic integration in North America was never a new one at the time of NAFTA’s ratification. Dating back over one-hundred years ago during the Presidency of William Howard Taft, President Taft had signed into law a reciprocal trade agreement with then Canadian Prime Minister Sire Wilfred Laurier. Free Trade at the time was a polarizing issue in Canada and the deal was stifled after Canadians voted Sir Wilfred out of office. Fifty years later during the Lyndon Johnson Administration, the United States and Canada had jointly signed into law the U.S.-Canada Automotive Products Agreement that liberalized trade in cars, trucks, tires and other crucial automotive parts between the two neighboring countries (). The auto pact between the two countries has been credited as a colossal stepping-stone in implementing a cohesive and integrated North American automotive sector. In the case of the United States southern neighbor Mexico, the government dating back to the Reagan Administration began implementing reform measures prior to NAFTA to liberalize the Mexican economy. By 1990, NAFTA negotiations were in their initial first round of talks. Mexico during that time was implementing numerous economic reforms to liberalize its economy and curtail its protectionist trade policy. Back tracking three years prior to NAFTA negotiations, both the United States and Canada in October of 1987 agreed to the Canada-United States Free Trade Agreement (CUSFTA) (). The Trade deal officially became “the law of the land” within both countries after President Reagan of the United States and Prime Minister Brian Mulroney of Canada signed it on January 2, 1988. The FTA was the most significant bilateral trade deal between the two nations since the Auto Pact and while free trade remains a polarizing debate topic in the United States, the trade deal was considered by many as a “watershed moment” for Canada (). CUSFTA was prominent campaign subject during the 1988 Canadian election between Progressive Conservative Prime Minister Brian Mulroney, who help draft the agreement, and Liberal party leader John Turner, who made a solemn commitment to abolish it. Mulroney and his party emerged victorious in the election and bilateral trade deal between the two countries and was passed by Parliament in December 1988().
The trade deal has been lauded by numerous economist and trade policy experts as one of the most comprehensive bilateral FTA’s, by implementing several noteworthy provisions. The trade deal eliminated tariffs by the year 1998, though some were stifled almost immediately after ratification, continuation of the U.S.-Canada Auto Pact, streamlined cross-border travel for business professionals (). Other notable provisions included banning imposition of performance requirements, such as import substitution, local content and sourcing requirements. Lastly, the bilateral deal enlarged the size of federal government procurement of available markets for competitive bidding from suppliers of the other country, however it did not include language of sub-federal government procurement.
A century before NAFTA negotiations commenced between the United States, Canada, and Mexico the foundation for Mexico’s economic modernization began between the years of 1867-76, with President Benito Juárez, who sought to attract foreign capital to fund Mexico’s modernization. The Juárez government reformed the tax and tariff apparatus to invigorate the countries mining sector, and it significantly bolstered the country’s transportation and communication infrastructure to fully take advantage of its own precious resources. The country’s protectionist economic policy came in the form of high tariffs to protect its most lucrative sectors. Namely, the textile industry, which expanded two-fold in terms of processed items between 1854 to 1877. The Mexican economy remained stagnant and the manufacturing sector grew at a modest pace (). From 1876 to 1910 during the Porfiriato, the Mexican economy grew at a rapid and continuous pace, continuing the building blocks for a modernized economy. President José de la Cruz Porfirio Díaz established a new political philosophy for Mexico which consisted of establishing the rule of law, social peace, and political stability (). His political reforms brought about increased capital investment that financed Mexico’s modernized economy. Crime in the form of rural banditry had dwindled local custom duties that had often hampered domestic trade were relinquished from the books. The country’s progress however soon witness all the economic gains that it had made evaporate before their eyes during the Mexican Revolution (1910-20) and the Great Depression (1929-33). In particular, with the Mexican Revolution, the Mexican labor force plummeted, livestock sunk due to depredations from resurrected rivaling militias, and the agricultural sector suffered catastrophic losses. Vital crops such as cotton, coffee, and sugarcane were not cultivated, and fields were left desolate. Black Markets rose to prominence in major urban areas, due to disruptions in communication and rail which led to further deterioration in production of perishable goods (). Financial institutions went into oblivion as access for individuals to gain credit was inoperable and currency was left in ruin. Mexico’s crown jewel economic sector was not left unscathed. Mining suffered colossal losses, with gold production plummeting 80 percent from 1910 to 1916, silver and copper also declined 65 percent as well.