Assessing NAFTA and the U.S.-Mexico Border Region

Abstract

Five years after its implementation, the environmental impact of the North American Free Trade Agreement (NAFTA) is still being debated. Many people feared that NAFTA would allow Mexico to become a pollution haven, causing U.S. firms to relocate. There are mechanisms built within the NAFTA framework to ensure that this doesn't happen. One of the most obvious mechanisms is the legislative language. policies and organizations that are incorporated within the NAFTA agreement. In addition, the increasing income levels of the Mexican people as a result NAFTA will lead to demands for better living conditions. Furthermore the country has an interest in adhering to NAFTA in order to retain favorable trading partner status. The bottom line is that NAFTA will take time to sort out problems. It is not to say that the deteriorating border problem should be ignored, but rather, that we must recognize NAFTA for what it is, and let it work its magic over time. For NAFTA to improve the border conditions sooner rather than later, however, a system of market-based solutions is needed. A tradable rights scheme for water, air, and other pollutants can be implemented to induce U.S. companies to replace older plants with newer, more efficient plants in Mexico.