Walmart and Nafta

Prior to the creation of NAFTA Walmart was primarily selling and distributing only within the confines of the United Sates. NAFTA allowed Walmart to reach out and thrive in not only the three countries of NAFTA (United States, Canada, and Mexico), but to reach areas in the far east. NAFTA enable Walmart to eliminate many of the existing government restrictions on how and where they could operate. This enabled Walmart to be able to have their products assembled in Mexico (cheaper labor, lower taxes), and send the finished products back to the states to sell for prices way higher than what it cost to make them. Profits would be much lower if these products were made in the states (Organic Consumer Association, 2005). Not only did the creation of NAFTA benefit Walmart, but the countries they do business in. In 2005 Walmart was the largest private employer in Mexico. U.S. imports from Mexico increased by 229 percent between 1993 and 2001. The creation of NAFTA only helped strengthen Walmarts competitive advantage of searching to make their products the everyday low prices. With the ability to make the products cheaper Walmart is able to sell their products at a lower price than their competitors and the sheer large quantities of items sold will reap massive increase in profit for years to come.

While Walmart has provided more jobs and brought a new source of products and services to Mexico, it is also causing some problems within the country. Exports into Mexico increased 144 percent into the country between 1993 and 2001. Of these exports, 60 percent were components being shipped to warehouses to build Walmart's products. This was taking the local community out of the equation for supplying the raw goods to make things. Exporting in food and materials have caused many farms to go out of production because farmers are unable to match companies like Walmart's success. With the loss of farms those farmers are now looking to companies like Walmart for...