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The Long and Short of the Canada-U. S. Free Trade Agreement

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Daniel Trefler

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Abstract

The Canada-U. S. Free Trade Agreement provides a unique window onto the effects of a reciprocal trade agreement on an industrialized economy (Canada). For industries that experienced the deepest Canadian tariff cuts, the contraction of low-productivity plants reduced employment by 12 percent while raising industrylevel labor productivity by 15 percent. For industries that experienced the largest U. S. tariff cuts, plant-level labor productivity soared by 14 percent. These results highlight the conflict between those who bore the short-run adjustment costs (displaced workers and struggling plants) and those who are garnering the long-run gains (consumers and efficient plants).

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File URL: http://hdl.handle.net/10.1257/0002828042002633
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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 94 (2004)
Issue (Month): 4 (September)
Pages: 870-895
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Handle: RePEc:aea:aecrev:v:94:y:2004:i:4:p:870-895

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References listed on IDEAS
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