S. - Canada Free Trade Agreement (CFTA). This agreement reduced many agricultural tariffs between the two countries except for the tariffs covered under the tariff-rate quotas (TRQ's). NAFTA on the other hand calls for the reductions and phasing out of other tariffs in many categories such as motor vehicle, computers, textile, and agriculture over a fourteen-year period. The three-country agreement has many controversies though, especially in the environmental part of the pact. A commission has been set up to monitor the environmental regulations, CEC (Commission on Environmental Cooperation), so that no country relaxes their regulations (Hill, 2000).
Development Stage and Business Opportunities.
Mexico is in the mid development range. The country is making a strong run at using the NAFTA pact to build up their economy and make their presence felt in the textile industry. In recent years Mexico has achieved and even surpassed the government's main macroeconomic targets by growing 3.6 percent. In 1999, Mexico's registered workers increased by more than 870,000 people. Unemployment dropped to its lowest level since 1985. This North American country has an open market for companies interested in starting up there. Mexico's work force leans toward the labor side of the scale. The electronic business in Mexico is mostly parts assembly. Mexico's motor vehicle industry is also very strong, making parts for American companies and assembling vehicles for European companies. The strongest industry Mexico has to offer other countries like the United States is the textile industry. Mexico has a high range of products produced for outside companies. Most of the garments sold in the United States are produced in Mexico. The hope for Mexico is for many more companies to come into their country to open up operations, in order for Mexico to prosper (Hill, 2000).
Drivers.
Some of the major drivers in the NAFTA regions include technological innovation, economic improvement, and political reasoning.