Encyclopedia of the Great Plains

NAFTA

The North American Free Trade Agreement (NAFTA), implemented on January 1, 1994, is an agreement to remove most barriers to trade and investment in both goods and services among Canada, the United States, and Mexico. Its purpose is to stimulate economic growth in the three countries and to increase jobs. Full employment in Mexico, for example, will help its economic growth, discourage emigration, and create wealth for Mexican consumers to buy American and Canadian products. Items that now move more freely among the signatory nations include capital, textile products, petrochemicals, automobile components, fertilizers, farm products, and telecommunications. In the case of farm products, for example, some tariffs were removed immediately, and most others are being phased out over a transition period.

In the Great Plains, two trading groups have emerged to take advantage of NAFTA. The Camino Real Economic Alliance (CREA) operates at the western fringe of the Plains, linking fortyfive business organizations from Chihuahua, Ciudad Juárez, El Paso, Las Cruces, Albuquerque, and Santa Fe. CREA seeks to strengthen ties between and development of the states of Chihuahua and New Mexico and the region of West Texas. A second group is the Rocky Mountain Trade Corridor (RMTC), which is a membership organization for small businesses throughout the Great Plains. The RMTC convenes seminars on NAFTA and matches its members with business partners in Canada and Mexico.

Outside of these groups, businesses in the Great Plains are trading under NAFTA on their own. On a state-by-state basis, there is a positive trade balance with Canada. The trade balance with Mexico is more mixed. Exports to Mexico in 1994–95 dipped in Kansas, Oklahoma, Nebraska, South Dakota, and Texas but went up in Colorado, North Dakota, Montana, and Wyoming. The freight data for goods shipped to Mexico in 1996 yield a similar picture. At present Texas is positioned to capitalize on the impending boom in Mexico.

What does NAFTA mean to the Great Plains? It means highway construction, bridge maintenance, railway mergers, train coordination, warehousing, and trucking. Congress has set aside $700,000 for highway construction. Interstate 35 will get the lion's share of that money. The Santa Fe Railroad has concluded a merger with Burlington Northern and relocated its corporate headquarters in Texas, a move from which Dallas–Fort Worth will benefit. The Santa Fe must now coordinate its train business with its rival (Union Pacific) to ensure smooth flows of commerce across the Plains. Warehousing facilities are going up in the Great Plains. Big firms have constructed one or two strategically located facilities from which they ship consumer goods. Canadian firms servicing the U.S. market and American firms servicing the Canadian market have erected warehouses in Omaha, Nebraska. Denver, Colorado, Kansas City, Missouri, and Dallas, Texas, have experienced similar growth, a growth that has benefited local economies. Though warehouses attract few workers, the land on which these facilities rest produces property taxes to fund local schools. Trucking is booming on i-29, i-70, and i-35, largely due to NAFTA commerce. But the flow of commerce south to Mexico has been impeded by bottlenecks. In Laredo, Texas, by far the busiest U.S.-Mexican crossing point, cargo lines have tested driver patience. Haulers often have to wait up to ten hours before moving their cargo into Mexico. Trucks have to cross two aging bridges to get to their destinations. The amount of commerce moving into Mexico is also determined by the pace of border inspections.

Beyond the bridge building, the inspectors, and the highway improvements, nagging issues threaten the flow of commerce. American access to Canadian dairy and poultry markets, grain trade between the United States and Canada, and granting access to American beef in Canada head the list.

Ronald C. Griffin Washburn University

Glick, Leslie A. Understanding the North American Free Trade Agreement. Boston: Deventer, 1993.

Moss, Ambler H., Jr., ed. Assessments of the North American Free Trade Agreement. Coral Gables FL: Transaction, 1993.

Riggs, Alvin R., and Tom Velk, eds. Beyond NAFTA: An Economic, Political, and Sociological Perspective. Vancouver: Fraser Institute, 1993.