A Research on the Relationship between Free Trade and Environment in Mexico

Abstract

This article analyzes the relationship between free trade and environmental performance of Mexico since the trade liberalization in the 1990s. There has been a hot debate about the trade effect on the environment. Those who are in favor of trade liberalization argue that free trade increases income and improve the environment. But environmentalists have argued that the asymmetric free trade between Mexico and United States would deteriorate Mexican environment because it would make Mexico a pollution haven. An analysis of composition effect, which is the compositional change of Mexican industry since NAFTA, has showed that the contaminant have grown in Mexican economy. But the environmental performance analysis also demonstrated that the pollution has not deteriorated at the same pace as the contaminant industries growth. The carbon monoxide emissions are diminishing, and ozone and sulfur dioxide are the main polluters now. Through the analysis, its proved that the regulation effect of NAFTA played an important role in the improvement of Mexican environment.