Apart from the traditional business challenges of getting access to tangible market information and liaison with customers and partners, the companies that come under the fold of NAFTA need to fulfill a range of technical requirements and other issues before they are able to receive the trade and tariff benefits of NAFTA (Azul, 2009). There is also the relative disadvantage of exchange rate fluctuations in the region.
Although the rates are pegged to the US dollar for most of the time, the recent financial crisis and previous decline in the Mexican currency can make a business vary as to the risks associated with exchange rate changes which may raise the costs of hedging as well. This is not an issue a new operation will encounter in the European Union. There is also the danger of the NAFTA being phased out on the part of the United Statesas the rhetoric of politicians such as Obama and Hillary Clinton has suggested (Judis, 2008). This is because of the perceived loss in jobs caused in the manufacturing sector which are believed to have been pulled south by Mexico’s lower wages.
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