North American Free Trade and the Production of Finished Automobiles

Following closely on the heels of the U.S.—Canada Free Trade Agreement, the North American Free Trade Agreement (NAFTA) focused attention on U.S.—Mexico trade liberalization. Strong support for such an agreement existed on both sides of the border, but dissent was heard in both countries as well. In the United States, this dissent focused not on the issue of aggregate income, but on the possible vulnerability of a number of U.S. industries and their workers. Concern was felt in Canada as well, insofar as a U.S.—Mexico agreement could result in the diversion of export production in some Canadian manufacturing industries from Canada to Mexico. One such industry is the automobile industry.