Chart 1. Average levels of tariffs applied in Mexico and the United States (1993 and 1996) Most economists argue that trade liberalization promotes overall economic growth and the efficiency of trading partners, although there are short-term adjustment costs. NAFTA was unusual globally because it was the first time that a free trade agreement involved two prosperous and developed countries with a low-income developing country. That is why the agreement has received a great deal of attention from U.S. politicians, manufacturers, service providers, land producers, unions, non-governmental organizations and academics. Supporters argued that the agreement would help create thousands of jobs and reduce income gaps between Mexico and its northern neighbors. Opponents warned that the deal would result in huge job losses in the United States, with companies relocated to Mexico to reduce costs.39 According to the Sierra Club, NAFTA has contributed to large export-oriented agriculture, resulting in increased use of fossil fuels, pesticides and GMOs.  NAFTA has also contributed to environmentally harmful mining practices in Mexico.  It has prevented Canada from effectively regulating its oil sands industry and has created new legal opportunities for transnational companies to combat environmental legislation.  In some cases, environmental policy has been neglected as a result of trade liberalization; In other cases, NAFTA`s investment protection measures, such as Chapter 11, and measures to address non-tariff barriers to trade have threatened to discourage stronger environmental policy.  The most severe increases in pollution attributable to NAFTA were in the base metals, Mexican petroleum and transportation equipment sectors in the United States and Mexico, but not in Canada.  Foreign direct investment (FDI) has been an integral part of U.S.-Mexico economic relations for many years, particularly after NAFTA.
Two-lane investments increased rapidly after the agreement came into force. The United States is the main source of direct investment in Mexico. The stock of U.S. direct investment in Mexico increased from $15.2 billion in 1993 to $104.4 billion in 2012 (587%) then fell to $92.8 billion in 2015 (see Table A-4). FDI flows have been influenced over the years by other factors, with stronger growth during the economic expansion phase in the late 1990s and slower growth in recent years, possibly due to the economic slowdown caused by the 2008 global financial crisis and/or the rise of violence in Mexico. Although Mexican direct investment in the United States is significantly lower than U.S. investment in Mexico, it also grew rapidly, from $1.2 billion in 1993 to $16.6 billion in 2015 (1283% increase) (see Table A-4). 69 The North American Environmental Cooperation Agreement, also known as the Environmental Side Agreement, was adopted along with the labour agreement and negotiated in response to concerns that NAFTA has little to do with environmental protection.
In the environmental agreement, the three parties express their desire to promote environmental concerns without harming the economy and to promote open public debate on environmental issues.