NAFTA has established has greatly benefited the U.S. economy. During the years from 1994 to 1997, U.S. trade with Mexico and Canada rose 44 percent. This extensive growth is accredited primarily to the reduction of tariffs. As tariffs were lowered, U.S. goods became cheaper and more competitive in Mexican and Canadian markets, and at this lower price level the quantity demanded of U.S. goods increased. Therefore it becomes less expensive for U.S. firms to supply goods to Canada and Mexico as the supply curve shifts upward. NAFTA has had the greatest effect on the agricultural sector. From fiscal year 1997 to 1998, U.S. farm and food exports to Mexico climbed by $881 million to $5.9 billion, the highest level ever and the fourth record in five years under NAFTA (USDA, 1999:1). U.S. exports of soybeans, cotton, and rice all set new records. By value, more U.S. agricultural products went to Mexico in 1998 than to China, Hong Kong, and Russia combined (USDA, 1999:2). In the years immediately prior to NAFTA, U.S. agricultural products lost market share in Mexico as competition for the Mexican market increased. NAFTA reversed this trend. The United States now supplies more than 75 percent of Mexico’s total agricultural imports, due in part to the price advantage and preferential access that U.S. products now enjoy.

In order to meet the new demand, the firms must hire new workers and increase investment. Between 1994 and 1997, 90 to 160 thousand jobs were created in the U.S. due to the increase of trade with Mexico, and 2.4 million jobs were dependent upon trade

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