NAFTA and the Geography of North American Trade

FRB of St. Louis Working Paper No. 2000-017B

25 Pages Posted: 1 Jan 2001

See all articles by Howard J. Wall

Howard J. Wall

Lindenwood University - Center for Economics and the Environment

Date Written: November 2000

Abstract

Debates over the desirability a preferential trading area (PTA) begin with the supposition that it will have two effects on the volume of trade: it will increase trade between PTA members, and decrease trade between members and non-members. This paper demonstrates, however, that at the regional level the effects of NAFTA have been much more complicated than what is normally supposed. Specifically, I find that NAFTA has meant (i) less trade between Eastern Canada and the United States and Mexico, (ii) more trade between Central Canada and the United States and Mexico, and (iii) more trade between Western Canada and Mexico, but no change in the volume of trade between Western Canada and the United States. I also find that NAFTA has decreased trade between Canadian regions and both Europe and Asia, while increasing Mexico's trade with Asia.

Keywords: NAFTA, Geography, Trade diversion, trade creation

JEL Classification: F13, R11

Suggested Citation

Wall, Howard J., NAFTA and the Geography of North American Trade (November 2000). FRB of St. Louis Working Paper No. 2000-017B, Available at SSRN: https://ssrn.com/abstract=239597 or http://dx.doi.org/10.2139/ssrn.239597

Howard J. Wall (Contact Author)

Lindenwood University - Center for Economics and the Environment ( email )

209 S. Kingshighway
St. Charles, MO 63301
United States

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