Cultural Revolutions

NAFTA Approved

NAFTA was approved by Congress in November 1993. That year, the United States had a $1.6 billion trade surplus with Mexico, down from $5.7 billion the year before. The proponents of the new agreement argued that the "opening" of Mexico would reverse this trend.

Home to 90 million people, Mexico was portrayed as a "big emerging market" which President Clinton claimed could revive the U.S. economy. Clinton came into office with a very pessimistic view of America's economic future. Administration reports regularly asserted that "as a mature economy with few domestic opportunities for growth, we must reach the 96 percent of our customers who live outside the United States." That Mexico lacked the money to buy American-produced goods in volume was never considered. Mexico's GDP was only $366 billion when NAFTA was signed (less than six percent of the size of the U.S. economy), and Mexico was running a $24 billion current account deficit. Not only were Mexicans poor, but the ability of their government to finance more imports had also reached its limit.

Mexico went into financial crisis in 1994, requiring a $54 billion bailout package, financed primarily by the United States. In order to restructure its debts, Mexico had to generate a trade surplus. Between 1992 and 1997, Mexico increased its exports to the United States by 144 percent, running up some $50 billion in trade surpluses between...

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