NAFTA at 20 (The Economist, January 4 th 2014)

Between 1993 and 2012, there was a great leap of trade between America and Mexico (506%), compared with 279% in non-NAFTA countries.

Fears that Mexico will hoover up American jobs never materialized- more jobs went to China then Mexico. In 2015, Mexico will have a cost advantage over China of almost 30%.

For the first six years, cross-border investment ballooned. Rapid growth led to the three countries’ share of global production hitting a peak of 36% in 2011.

Industries from aerospace to cars have woven supply chains back and forth across North America’s borders.

Mexico, an emerging market hitched to two larger, rich ones- has been NAFTA’s biggest beneficiary: Import competition has improved Mexican manufacturing productivity Foreign direct investment into the country has surged Membership of NAFTA has shored up Mexico’s domestic political commitment to open

markets Provided template for other free-trade agreements (14 and counting)

But for all its promise, NAFTA had failed to close the development gap between Mexico and the US. Momentum of the biggest gains in trade has also waned in recent years. Trade infrastructure is badly in need of an upgrade and outmoded regulatory structures that now seem overly restricting need to be reformed. There are inconvenient hours of waiting at the border of Mexico and US, where trade takes place on railway lines and in lorries,

NAFTA could also do more to avert the negative effects of regional trade deals. NAFTA risks diverting trade from countries outside the club to those inside it.

NAFTA should show how regional deals can be bridges to wider liberalization (US, Canada and Mexico should not pursue FTAs with European Union separately)

Mexico has signed FTAs with over 44 countries since NAFTA was set up, and this attracts expanding supply chains and companies into the country.

NAFTA also protects the intellectual-property arrangements that is hard to guarantee when dealing with China; it has enforceable commitments on copyrights, patents, trademarks and trade secrets.

US, Canada and Mexico should look to expand NAFTA- inviting new members from Central America, the Caribbean and Latin American, to be a proponent of free trade across all the Americas.

Two fifths of Mexicans are under 20. Its labour force is expected to grow by 58% in 2030. The shale-gas revolution, development of Canada’s oil sands, and a constitutional change in December allowing private firms to invest in Mexican energy could give industries supplies of low-cost energy.

Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership could undermine Mexico’s trade advantages within North America, because they would allow other countries low-tariff access to the United States. But the whole region may be better off, if they help promote regulatory harmony and trade in services.