Free Trade with Mexico and U.S. National Security

Abstract : On August 12, 1992, the United States, Mexico and Canada agreed on a trade pact calling for free commerce and investment among the three countries (North American Free Trade Agreement, NAFTA). If the three countries' legislative branches approve the NAFTA it will become effective January 1, 1994. This paper analyzes the trade accord within the context of U.S. national security, and looks specifically at its economic, immigration and political impact on Mexico. This analysis draws three conclusions: One, NAFTA will have a positive impact on the United States and Mexico, but in the United States the impact will be statistically marginal because Mexico's small economy is unlikely to affect the much larger U.S. economy to any significant degree; in the long term NAFTA will provide U.S. businesses with an important competitive advantage. Second, NAFTA will not have a significant impact on Mexican undocumented immigration to the United States because of the current and expected labor surplus in Mexico and the likelihood that wages in the United States will remain substantially higher than in Mexico for years to come. While support for democratization remains a cornerstone of U.S. foreign policy, the United States has refused to leverage NAFTA to compel Mexican reforms, and NAFTA-driven economic liberalization in Mexico will not necessarily lead to democracy. Adam Przeworski's theoretical paradigm predicts two possible outcomes for authoritarian regimes such as Mexico's: political reform leading to full democracy; or, political reforms that are immediately reversed and followed by a return to authoritarian stasis.