At the same time, Mexico has enjoyed a considerable degree of specialization in products such as autos. Economic engagement has been facilitated by geographic proximity, as well as two decades of life with the North American Free Trade Agreement (NAFTA). Furthermore, integration between the two countries has occurred in a context of ever-deepening globalization.
The effects of increased trade due to NAFTA seem to have overridden any potential trade diversion from the preferential trade agreement. In fact, during recent years, Mexican exports have seen geographic diversification. While at the turn of this century, approximately 90 percent of Mexico’s total nonoil exports went to the United States, currently this proportion is roughly ten basis points lower.