The North American Free Trade Agreement (NAFTA): its effect on South Asia (original) (raw)
Related papers
NAFTA: Its effect on South Asia
Journal of Asian Economics, 1994
Since FTAs discriminate in favor of member countries, other exporters are naturally concerned about their trade being displaced. This paper quantifies these adverse "third party" effects of the North American Free Trade Area (NAFTA) agreement on South Asia. The key finding is that, due to major differences in the types of goods exported by NAFTA and South Asia, any of the latter's trade that is displaced will occur in a very narrow range of products, i.e., in probably little more than 10 four-digit SITC groups. The textiles and clothing sector emerges as the principal sector for concern, given that the preferential removal of tariffs (in the 15 to 30 percent range) and MFA quotas could provide Mexico with a formidable competitive advantage in the US market. However, domestic supply constraints (as evidenced by Mexico's serious and consistent under-utilization of its textile and clothing quotas), as well as NAFTA's domestic import content regulations, should limit the amount of trade in these sectors that Mexico displaces.
NAFTA effects and the level of development
Journal of Business Research, 2005
Much attention has been given to the impact that free trade agreements have had on member countries. There has been relatively little attention given to the impact on nonmembers, especially as it relates to both trade and FDI. This paper uses a gravity model framework to estimate the impact that the North American Free Trade Agreement (NAFTA) had on U.S. trade and FDI relationships with both member and nonmember countries. The estimated impacts are refined to account for each country's level of development. The results confirm many previous studies on the ability of the standard gravity model to explain trade and FDI patterns. This study goes further and establishes that there are additional impacts related to both membership in the NAFTA and levels of development. D
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.
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.
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.
Risks to the Sri Lankan Garment Industry from Trade Diversion Effects of NAFTA
Development Policy Review, 1997
The well-known economic impacts of regional blocs on a non-member country are: trade diversion, investment diversion, terms-of-trade effects, and trade creation. Trade diversion is particularly important. The formation of a regional bloc is presumed to lead to price advantages as the result of a reduction in production costs (in turn resulting from economies of scale) and a lower level of barriers as compared with those for non-members. Moreover, it is believed that indirect barriers to non-member countries via clauses in the trade and production process will lead to additional comparative advantage for intra-regional trade. It is presumed that these provisions will lead to diversion of trade away from non-member countries. The existing literature on the impact of the North American Free Trade Agreement (NAFTA) on non-member countries has focused mainly on trade diversion (Plummer and Imada, 1993; Safadi and Yeats, 1993; Primo Braga et al., 1994; and others). Most of these empirical studies have shown that the impact of NAFTA on trade diversion will be positive, though not significant. Safadi and Yeats and Primo Braga and his colleagues have argued that any trade diversion effects on South and East Asian exporters, respectively, from NAFTA will be more than offset by the successful implementation of the Uruguay Round of trade negotiations. The analysis of trade diversion in the various studies has been carried out using different methodologies such as the partial equilibrium model, the international trade linkages system, indices of trade similarities between different pairs of countries, gravity models, etc. The results vary from study to study and are not comparable. Trade diversion can also be analysed by examining the price competitiveness of the main export of a non-member country to the regional bloc, using a comparative static framework. Such analysis can always be combined with an analysis of additional factors to assess the medium-term impact of the regional bloc on the non-member country. This approach will be used in the present study to examine the impact of NAFTA on the Sri Lankan