Despite intense lobbying by Mexican frozen-food companies against NAFTA, the Mexican government approved the treaty. Hidalgo Tortilla Company is a small firm based in Guadalajara, Mexico's second-largest city. It makes frozen taco and enchilada products for Mexico's rapidly growing middle class. The company was against the trade treaty, because it feared that American competitors would come to Mexico and drive smaller Mexican firms like itself out of business.
1. Does the fact that no tariffs and quotas will exist under NAFTA necessarily mean that American companies will be successful in Mexico? Explain.
2. Does NAFTA provide any opportunities for Hidalgo Tortilla Company to grow? Explain.
3. If Hidalgo proves to be a tough competitor to the American companies, what may the American companies do?
4. What should Hidalgo do to prepare itself for possible competition from American products?