NAFTA liberalization and the role of nontariff barriers (original) (raw)
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We have used the Michigan Model of World Production and Trade to simulate the economic effects on the NAFTA member countries and other major trading countries/regions of a prospective new round of WTO multilateral trade negotiations, the variety of free trade agreements (FTAs) that the NAFTA members have negotiated or are considering, and the adoption of a system of common external tariffs by the NAFTA members. We estimate that an assumed reduction of post-Uruguay Round tariffs on agricultural and industrial products and services barriers by 33 percent in a new WTO trade round would increase world welfare by 613.0billion,withgainsof613.0 billion, with gains of 613.0billion,withgainsof177.3 billion for the United States, 13.5billionforCanada,13.5 billion for Canada, 13.5billionforCanada,6.5 billion for Mexico, and significant gains for all other industrialized and developing countries. If there were global free trade, world welfare would increase threefold to $1.9 trillion and the country/region gains would be similarly larger.
North American free trade: assessing the impact
1992
have assembled the contributions of leading economists and practitioners in order to assess the potential impact of NAFTA on the following economic and social variables: trade and investment flows, wages and employment levels, specific industry effects, nontrade issues such as the environment and human rights, and last but not least, the implications of NAFTA for Mexico's agricultural sector and the rest of the world.
2005
The aim of this study is to evaluate the impact of non-tariff measures (NTM) on NAFTA agro-food trade comparing the measures implemented at the borders of participating countries, Canada, United States and Mexico, and evaluating the impact of those NTM still implemented within the NAFTA area on agro-food market integration by estimating different gravity models for the agro-food industry as a whole and for particularly relevant product categories. The overall results from the gravity model offer a measure of the impact of the different types of technical provisions and of the different degree of application of the same measure, on the agro-food trade in the NAFTA area. The picture emerging from the estimates is quite complex: overall, a net trade creation effect seems to prevail, even though the results cannot be unambigously generalized, because they are conditional to product groups and country-specific measures.
A Partial Equilibrium Analysis of NAFTA's Impact on U.S. Bilateral Trade
International Journal of Economic Sciences and Applied Research, 2014
This paper examines the effects of the North American Free Trade Agreement on agricultural commodity trade using extensive data. The data cover agricultural exports and imports between the U.S. and NAFTA partners over the extended period of 1989-2010. The commodities covered in the analyses include; corn, soy bean, cotton, wheat, fresh vegetables, poultry, dairy products, and red meats. A partial equilibrium model, in which we derive each trading partner's excess demand and excess supply, is used to study the impact of NAFTA on trade, controlling for other trade-inducing variables such as exchange rates, tariffs, per capita incomes, and relative prices. Regression results show mixed effects of NAFTA on different commodities while graphical and counterfactual analyses indicate strictly positive effects.
The World Economy, 2019
Three years ago, very few economists would have imagined that one of the newest and fastest growing research areas in international trade is the use of quantitative trade models to estimate the economic welfare losses from dissolutions of major countries' economic integration agreements (EIAs). In 2016, "Brexit" was passed in a United Kingdom referendum. Moreover, in 2019, the existence of the entire North American Free Trade Agreement (NAFTA) is at risk if the United States withdraws-a threat President Trump has made if the proposed United States-Mexico-Canada Agreement is not passed by the U.S. Congress. We use state-of-the-art econometric methodology to estimate the partial (average treatment) effects on international trade flows of the six major types of EIAs. Armed with precise estimates of the average treatment effect for a free trade agreement, we examine the general equilibrium trade and welfare effects of the elimination of NAFTA (and for robustness U.S. withdrawal only). Although all the member countries' standards of living fall, surprisingly the smallest economy, Mexico, is not the biggest loser; Canada is the biggest loser. Canada's welfare (per capita income) loss of 2.11 percent is nearly two times that of Mexico's loss of 1.15 percent and is nearly eight times the United States' loss of 0.27 percent. The simulations will illustrate the important influence of trade costs-international and intranational-in contributing to the gains (or losses) from an economic integration agreement's formation (or elimination).
The Three Faces of Trade Liberalization: Unilateral, Preferential, and Multilateral
There is a growing number of studies that investigate the effect of trade liberalization on productivity and nearly all assume that trade policy is independently determined of productivity, hence it is exogenous. I show that this assumption is generally invalid both theoretically and empirically. In Chapter 1, I demonstrate that under a standard political economy model of trade protection, productivity directly influences tariffs. Moreover, this productivity-tariff relationship partly determines the extent of liberalization across sectors even in the presence of a large exogenous unilateral liberalization shock that affects all sectors. In Chapter 2, I examine total factor productivity (TFP) estimates obtained at the firm level for Colombia between 1983 and 1998 and find that more productive sectors receive more protection within this period. In estimating the effect of productivity on tariffs, I control for the endogeneity of the inverse import penetration to import demand elasticity ratio and productivity. Finally, I use a system of equations to illustrate that the positive impact of liberalization on productivity grows somewhat stronger when corrected for the endogeneity bias.
20 years of NAFTA – trends in trade and the economic effects
Ekonomia XXI Wieku, 2014
This year marks the twentieth anniversary of the largest economic grouping in history, both in terms of surface area and the generated GDP-the North American Free Trade Agreement-NAFTA. The grouping was established on 1 January 1994, with the objective of gradually doing away with the existing tariff and non-tariff barriers to trade between the United States, Canada, and Mexico. Its objectives and effects have long been under careful examination and subject to many analyses. Prognoses varied, from potentially significant benefits to anticipated losses, particularly for US economy. The paper is an attempt at presenting the twenty years of NAFTA operation, predominantly from the viewpoint of its impact on the trilateral trade exchange, unemployment, inflation, and the Gross Domestic Product (GDP) of its member states. The analyses suggest that NAFTA has proved its effectiveness in generating trade revenues for all its members, most notably for Mexico. However, its effects on individual income and employment were found to be marginal or, at best, moderate.