	Introduction

The North American Free Trade Agreement (NAFTA), in effect since January 1994, plays a key role in the bilateral economic relationship between Mexico and the United States. The two countries are closely tied in bilateral trade and investment, and in areas of mutual interest such as migration, security, environmental, and health issues. NAFTA's effect on Mexico and the state of the Mexican economy have implications for the overall relationship between the United States and Mexico and for U.S. economic and political interests. On May 19, 2010, Mexican President Felipe Calderón met with President Barack Obama during an official state visit of the Mexican president to the United States. The two presidents expressed a commitment to increase cooperation in enhancing economic competitiveness and noted progress in the building of a Twenty-First Century border, which includes three new border crossings that are opening in 2010, initiation of three additional binational bridge projects, and significant modernization projects at existing border facilities. Bush with the idea of forming a free trade agreement (FTA). President Salinas de Gortari's motivations in pursuing an FTA with the United States were to increase economic growth by attracting foreign direct investment (FDI); boosting exports; creating industrial jobs; and giving the Mexican economy a growth stimulus. The Mexican economy had experienced many difficulties throughout most of the 1980s with a significant deepening of poverty. Mexico's intention in entering NAFTA was to increase export diversification by attracting FDI, which would help create jobs, increase wage rates, and reduce poverty. The state of the Mexican economy is important to the United States because of the close trade and investment ties between the two countries, and because of other social and political issues that could be affected by economic conditions, particularly poverty and how it relates to migration issues. Unilateral trade liberalization measures prior to NAFTA and the currency crisis of 1995 both affected economic growth, per capita GDP, and real wages in Mexico. Economic Effects

A number of studies have found that NAFTA has brought economic and social benefits to the Mexican economy as a whole, but the benefits have not been evenly distributed throughout the country. Business cycles in Mexico, the United States, and Canada have had higher levels of synchronicity since NAFTA, and NAFTA has reinforced the high sensitivity of Mexican economic sectors to economic developments in the United States. One of the main arguments in favor of NAFTA at the time it was being proposed by policymakers was that the agreement would improve economic conditions in Mexico and narrow the income gap between Mexico and the United States. U.S.-Mexico Trade

Mexico's trade with the United States has grown considerably since 1994. The effects of trade liberalization have varied widely among regions, and while trade liberalization may narrow income disparities over the long run with other countries, it may indirectly lead to larger disparities in income levels within a country. Studies have found that initial conditions in Mexico determined which Mexican states experienced stronger economic growth as a result of NAFTA. While some of the changes in the agricultural sector are a direct result of NAFTA, as Mexico faced increasing import competition from the United States, many of the changes are also attributable to Mexico's unilateral agricultural reform measures. The unilateral reforms in the agricultural sector make it difficult to separate those effects from the effects of NAFTA.
The North American Free Trade Agreement (NAFTA), in effect since January 1994, plays a very strong role in the bilateral economic relationship between Mexico and the United States. The two countries are also closely tied in areas not directly related to trade and investment such as security, environmental, migration, and health issues. The effects of NAFTA on Mexico and the Mexican economic situation have impacts on U.S. economic and political interests. A number of policymakers have raised the issue of revisiting NAFTA and renegotiating parts of the agreement. Some important factors in evaluating NAFTA include the effects of the agreement on Mexico and how these relate to U.S.-Mexico economic relations. In the 111th Congress, major issues of concern are related to U.S.-Mexico trade issues, economic conditions in Mexico, the effect of NAFTA on the United States and Mexico, and Mexican migrant workers in the United States.
In 1990, Mexico approached the United States with the idea of forming a free trade agreement (FTA). Mexico's main motivation in pursuing an FTA with the United States was to stabilize the Mexican economy and promote economic development by attracting foreign direct investment, increasing exports, and creating jobs. The Mexican economy had experienced many difficulties throughout most of the 1980s with a significant deepening of poverty. The expectation among supporters at the time was that NAFTA would improve investor confidence in Mexico, increase export diversification, create higher-skilled jobs, increase wage rates, and reduce poverty. It was expected that, over time, NAFTA would narrow the income differentials between Mexico and the United States and Canada.
The effects of NAFTA on the Mexican economy are difficult to isolate from other factors that affect the economy, such as economic cycles in the United States (Mexico's largest trading partner) and currency fluctuations. In addition, Mexico's unilateral trade liberalization measures of the 1980s and the currency crisis of 1995 both affected economic growth, per capita gross domestic product (GDP), and real wages. While NAFTA may have brought economic and social benefits to the Mexican economy as a whole, the benefits have not been evenly distributed throughout the country. The agricultural sector experienced a higher amount of worker displacement after NAFTA, in part because of increased competition from the United States but also because of Mexican domestic agricultural reforms. In terms of regional effects, initial conditions in Mexico appear to have determined which Mexican states experienced stronger economic growth as a result of NAFTA. Some economists argue that while trade liberalization may narrow income disparities over the long run with other countries, it may indirectly lead to larger disparities in income levels within a country.
Over the last decade, the economic relationship between the United States and Mexico has strengthened significantly and the two countries continue to cooperate on issues of mutual concern. President Barack Obama met with Mexican President Calderón in May 2010 during the Mexican president's official state visit to the United States. The two leaders reaffirmed their commitment to increasing cooperation in a wide range of issues, including enhancing mutual economic growth. A key component for their global competitiveness initiative is to create a border the for the Twenty-First Century that will expand and modernize border facilities for a secure and more efficient border.