It has been more than 20 years since NAFTA was implemented with a massive increase in cross-border economic activity.
By uniting the economies of Canada, Mexico, and the United States, NAFTA created what is today a $19 trillion regional market with some 470 million consumers. The U.S. Chamber of Commerce figures that some six million U.S. jobs depend on trade with Mexico and another eight million on trade with Canada.
Canada ranks as the United States’ largest single export market, and it sends 98 percent of its total energy exports to the United States, making Canada the United States’ largest supplier of energy products and services. Mexico is the United States’ second-largest single export market. Over the past two decades, a highly efficient and integrated supply chain has developed among these three Amigos.
In terms of liberalizing trade, NAFTA has succeeded. But those of us who championed NAFTA hoped the agreement would be something more: a means to deepen integration among the three economies. Unfortunately, when measured against this more ambitious benchmark, NAFTA has fallen well short of expectations.
Thanks to this “Walmart effect,” millions of Mexicans can now buy products that were once reserved for a middle class that was less than a third of the population, and those products are now of far superior quality. If Mexico has become a middle-class society, as many now argue, it is largely due to this transformation, especially considering that Mexicans’ aggregate incomes have not risen much, in real terms, since NAFTA entered into force.