Strategic Human Resource Management

Section Two

North American Free Trade Agreement

The North American Free Trade Agreement (NAFTA) between
the United States, Canada, and Mexico eliminates tariffs on
goods produced in these countries. Canada is the largest
trading partner of the United States and Mexico is the second
largest. The act is still controversial, with unions claiming that
jobs have been lost, while employers and the U.S. Department
of Commerce point to job creations. Regardless of the various
claims, the effect on trade among the three countries is
indisputable because there has been remarkable growth. Trade
between the United States and Canada increased by 56 percent
during the first four years alone. Even more impressive is that
during the same period trade with Mexico increased by
113 percent. In addition, NAFTA has probably helped stimulate
interest in broader trade agreements between countries in
North and South America, such as the proposed Free Trade
Area of the Americas that would include many nations.^133

NAFTA and the possibility of further trade agreements
have several interesting implications for human resource
management. Many human resource managers become
involved in their companies’ operations in Canada and Mexico.
For example, along the border region of Mexico and Texas,
human resource managers commonly commute between
El Paso, where they live, and Juarez, where their plants are