Quantifying the Termination of NAFTA

Abstract

This paper quantifies the trade and economic impacts of the US terminating its NAFTA commitments under three alternative scenarios: NAFTA lapses with all three trading relationships reverting to WTO rules; NAFTA lapses but Canada and the United States retain bilateral free trade under the Canada-US FTA (CUSFTA); and Canada and Mexico trade remains under their bilateral NAFTA commitments. The impacts are evaluated using a computable general equilibrium model and takes into account the implications of imposing new tariff walls and removing the services and investment commitments under the NAFTA.

Keywords: NAFTA, Canada, Mexico, United States, computable general equilibrium, CGE modelling

JEL Classification: F13, F15