EFFECT OF NAFTA ON US IMPORTS

Effect of NAFTA on US Imports from Mexico

Effect of NAFTA on US Imports from Mexico

Introduction

The study is related to the effect of NAFTA on imports of United States from Mexico which is an important phenomenon to study as it relates to the balance of trade country. The imports of a country should be managed in such a way that it should not exceed with its exports; however, it this happens then the balance of trade of a country will be in negative which will affect the whole economy. Therefore, it is important that the effects of polices of North American Free Trade Agreement should be in favor of Mexico as well as United States as if the polices pertaining to exports are justified for each country in the agreement then the import policies will also be in favor of each country.

Research Question

- Is there an effect of NAFTA on US imports from Mexico?

Hypothesis

H o: There is an effect of NAFTA on US imports from Mexico.

H A: There is no effect of NAFTA on US imports from Mexico.

Background of Study

North American Free Trade Agreement is an agreement between Mexico, United States and Canada which are made in relation to trade bloc in North America. For that reason, imports of the countries get affected, this effect taken place duet o the decision made or the policies signed by the governments of these countries which affect the imports due to the change in the policies signed the governments in relation exports of the country. Therefore, NAFTA affects imports of United States from Mexico.

Literature Review

NAFTA

The North American Free Trade Agreement is an extensive business association between Canada, the United States and Mexico, forming a free trade zone in the North American continent. The NAFTA became the first January 1994. With the entry into force of the FTA were numerous duties abolished, many more have been exposed over time. The agreement came from the Canadian-American Free Trade Agreement of 1989 show that in contrast to the European Union, no supra-national exercises governmental functions, and its provisions take no position precedence over national law. It is an intergovernmental treaty.

Effects of NAFTA on U.S. Imports from Mexico

It is important to determine the effect of NAFTA in North America (NAFTA) on sales of products in the United States from the Mexico. This function estimates the U.S. imports from Mexico, using various techniques; from the theoretical point of view, the treaty should be the cause of the growing trade in agricultural goods between the two countries. However, in accordance with previous studies, the econometric analysis found that NAFTA is not the cause of increased trade flows. The main determinant in the equation of imports is the exports of United States from Mexico. In the case of exports of United States, imports is estimated to range between -0.2 and -0.5, figures similar to those found in similar studies for other countries (Johnson, 2002).

Economic impact of NAFTA on the United States

The United States as a ...