The North American Free Trade Agreement (NAFTA) was a tripartite agreement negotiated by the governments of Canada, Mexico and the United States and entered into force in January 1994. NAFTA eliminated most tariffs on products traded between the three countries, with a focus on trade liberalization in agriculture, textiles and automotive manufacturing. The agreement also aimed to protect intellectual property, establish dispute settlement mechanisms, and implement labour and environmental protection measures through subsidiary agreements. However, there were adjustment costs for workers and businesses as the three countries moved to more open trade and investment in their economies. The report also estimates that NAFTA has added $80 billion to the U.S. economy since its inception, representing a 0.5% increase in U.S. GDP.  Regional trade agreements (RTAs) have proliferated worldwide since the early 1990s. Many members of the World Trade Organization (WTO) emphasize regional or bilateral free trade agreements as a key element of their foreign and trade policies.1 This interest is evident in both developed and developing countries, as well as in various regions of the world. Mexico is a member of the WTO, which allows members to conclude regional trade integration agreements under certain conditions defined in specific WTO rules.2 This classification system offers more flexibility than the four-digit structure of the CTI by implementing a hierarchical six-digit coding system and dividing all economic activities into 20 industrial sectors. Five of these sectors are mainly those that produce goods, while the other 15 sectors are exclusively those that offer some kind of service. Each company receives a primary NAICS code indicating its primary line of business.
A company receives its main code based on the definition of the code that generates most of the company`s revenue in a given location in the past year. Trump avoided these policy proposals and instead kept his campaign promise to renegotiate NAFTA. It used tariffs as a negotiating lever throughout the process, applied import tariffs on steel and aluminum in early 2018, and threatened to do the same with automobiles. Trump`s demands included better access to Canada`s strictly protected dairy market, better labor protections, dispute settlement reform, and new rules for digital trade. Mexico`s many free trade agreements and trade liberalization policies are of interest to U.S. policymakers because they have implications for U.S.-Mexico trade, economic stability in Mexico, and the overall relationship between the two countries. Economic conditions in Mexico are important to the United States because of Mexico`s proximity to the United States, close trade and investment ties, and other social and political implications. Another issue of interest to U.S. policymakers is the impact of Mexico`s free trade agreements on U.S. exports to Mexico.
The liberalization of Mexico`s trade and investment barriers vis-à-vis other countries has led to increased competition for U.S. goods and services in the Mexican market. As a result, the U.S. share of goods imported by Mexico has steadily declined over the years. The North American Free Trade Agreement (NAFTA) was implemented to promote trade between the United States, Canada and Mexico. The agreement, which eliminated most tariffs on trade between the three countries, entered into force on 1 January 1994. Many customs duties, particularly in the areas of agriculture, textiles and automobiles, were phased out between 1 January 1994 and 1 January 2008. In 2016, Mexico`s main export products were passenger cars, auto parts, motor vehicles for the transportation of goods, automatic data-processing machines and electrical telephone appliances. The main imports were auto parts, refined petroleum products, integrated electronic circuits, electrical equipment for telephones and automatic data-processing machines (see Table 2). .