This paper summarizes the major expected economic impacts of a free trade agreement (FT A) with Mexico on various sectors of the economy of border areas including agriculture, retailing, the maquiladora industry, and capital investment. Estimates of impacts in terms of goods and services trade, capital investment, and employment are presented for border areas. Projections of Texas exports, Gross State Product, and employment impacts are presented for the next decade. Overall, freer trade between Mexico and the United States are likely be of economic benefit to both countries. Benefits to the Texas economy are projected to be significant.