What were the limitations of NAFTA? How did its replacement by the United States-Mexico-Canada Agreement counter them? Explain.

Limitations of NAFTA

First, labour and wages. Critics in the United States argued that firms moved production to Mexico, hollowing industrial towns, while Mexican wages and union freedom did not rise in line with productivity. Second, environment. The side accords were weaker than the commercial core; pollution and weak enforcement at the border remained a campaign fact. Third, asymmetry. Mexico was the developing partner in a deal written around U.S. law and investor comfort. Wallerstein’s core–periphery language is too crude for Mexico’s industrial upgrade, but the power imbalance was real. Fourth, investor–state dispute settlement (ISDS) allowed firms to sue governments in ways that looked, to publics, like a veto on regulation. Fifth, agriculture and dairy fights, especially with Canada, never disappeared. Sixth, no development or adjustment politics equal to the shock: there was no EU-style cohesion fund. Seventh, legitimacy. By the 2016 U.S. election NAFTA was a symbol of globalisation’s domestic cost, which is the politics behind question 2(a).

NAFTA did raise intra-North American trade and locked in Mexican liberalisation. The limitations were distribution, democracy of regulation, and political consent.

How USMCA tried to counter them

USMCA kept the regional production club and rewrote the bargain. Rules of origin for automobiles were tightened so that more content had to come from North America and from higher-wage labour, a direct reply to offshoring politics. A rapid-response labour mechanism, especially aimed at Mexican factories, gave the United States a tool that NAFTA’s side agreement lacked. Environmental provisions were moved into the core text with stronger dispute potential. ISDS was narrowed sharply between the United States and Canada and limited with Mexico, a reply to the regulatory-chill charge. Digital trade chapters updated a 1990s text for data and platforms. A sixteen-year sunset with periodic review was meant to stop the deal from looking eternal and unaccountable. Canadian dairy access was adjusted in the U.S. interest. Intellectual property terms were tightened in ways critics still call Northern.

How far the counter goes

USMCA is managed trade, not a labour international. Mexican labour reform is incomplete; U.S. industrial decline has many causes besides NAFTA; climate is still not a full North American industrial plan. The replacement countered the most explosive political limits — labour optics, ISDS, auto origin — so that regional integration could survive deglobalisation talk. It did not turn North America into a social union.