Mexico & Nafta - January 2009 (ISSN 1741-444X)

President Felipe Calderón Hinojosa's initial hostility to making changes to the North American Free Trade Agreement (Nafta) may be misplaced. A study by the Universidad Iberoamericana of the first 15 years of Nafta found that Mexican exports had increased more to other countries than to the US.

This finding, by Arnulfo R Gómez, and highlighted by several leading newspapers in Mexico, suggests that Mexico has not benefited from Nafta, which began in 1994, as much as the treaty's proponents suggested. Gómez argues that the economic evidence is that every passing year weakens the trade links between Mexico and the US. He points out that fewer and fewer components come from the US and now Mexico imports more consumer goods from beyond the US.

Calderón appears to have taken this argument on board. After his final meeting in the Oval Office with President George W Bush on 13 January, Calderón said: “We have always been willing to revise aspects [of Nafta]." US based Mexican watchers say that President-elect Barack Obama's appointment of Ron Kirk, a former mayor of Dallas, as US Trade Representative, suggests that his administration is well aware of what is actually happening to trade between the US and Mexico.

Gómez argues that the maquila programme, which allowed US companies to set up cheap labour plants across the border in Mexico has run its course. The plants have not led to much technology transfer or the development of Mexican dominated supply chains. He also noted that several of the early maquila pioneers have moved on to even cheaper locations such as Central America and Asia.

A lot of Gómez's findings are the result of the surge in Chinese exports. China has overtaken Mexico (despite Mexico's crude oil exports to the US) to become the US's second largest source of imports after Canada. Before, and in the early years of Nafta, Mexico was easily the US's second greatest source of imports. Mexico remains the US's second biggest trade partner because it still imports more from the US than China does. Gómez points out that from 1993 to 2002, Mexico's share of the US import market increased from 6.87% to 11.59%. Since then Mexico's share has fallen back, and in 2007 stood at 10.7%.

This suggests that revising Nafta, to meet demands made by US environmentalists and trade unionists, would not have a decisively damaging effect on US-Mexican trade. Improving the lot of Mexican migrants in the US could benefit Mexico more by allowing Mexicans to improve their living standards by a degree they could not achieve in Mexico.