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Toward a North American Security Perimeter? Assessing the Trade and FDI Impacts of Liberalizing 9/11 Security Measures

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Author Info

  • Patrick Georges

    ()
    (Graduate School of Public and International Affairs, University of Ottawa, Ottawa, ON)

  • Marcel Mérette

    (Department of Economics, University of Ottawa, 55 Laurier E., Ottawa, Ontario)

  • Qi Zhang

    (Department of Economics, University of Ottawa, 55 Laurier E., Ottawa, Ontario)

Abstract

This paper examines, for the first time, the trade and FDI impacts of a North American Security Perimeter that would liberalize the post 9/11 security measures at the Canada-US border. First, the study estimates econometrically the impact of post 9/11 security measures on bilateral (US-Canada) trade flows using a gravity model. Second, using these econometric estimates together with a three-region nine-sector general equilibrium model, we compute sectoral tariff rates “equivalent” to the 9/11 security measures. Finally, we assess the (general equilibrium) impacts on trade and FDI of a change of security paradigm toward a North American Security Perimeter. The paper shows that the economic opportunity gains occurring to Canada and the US from the liberalization of the 9/11 security measures amount to US$20 billion annually. This figure, once added to the direct administrative costs of the post 9/11 security measures, warrants serious consideration in policy discussions of a North American Security Perimeter.

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File URL: http://www.socialsciences.uottawa.ca/sites/default/files/public/eco/eng/documents/1204E.pdf
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Bibliographic Info

Paper provided by University of Ottawa, Department of Economics in its series Working Papers with number 1204E.

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Length: 36 pages
Date of creation: 2012
Date of revision:
Handle: RePEc:ott:wpaper:1204e

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Related research

Keywords: Foreign Direct Investment; Trade Flows; Post 9/11 Security Measures; North American Security Perimeter; Gravity Model; General Equilibrium Modelling.;

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References

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  1. Steven Globerman & Paul Storer, 2009. "Border Security and Canadian Exports to the United States: Evidence and Policy Implications," Canadian Public Policy, University of Toronto Press, vol. 35(2), pages 171-186, June.
  2. Grady, Patrick, 2009. "Were Canadian Exports to the U.S. Curtailed by the Post-9/11 Thickening of the U.S. Border?," MPRA Paper 21047, University Library of Munich, Germany.
  3. Patrick Georges, 2010. "Dispensing with NAFTA Rules of Origin? Some Policy Options," The World Economy, Wiley Blackwell, vol. 33(11), pages 1606-1637, November.
  4. Trien T. Nguyen & Randall M. Wigle, 2011. "Border Delays Re-Emerging Priority: Within-Country Dimensions for Canada," Canadian Public Policy, University of Toronto Press, vol. 37(1), pages 49-59, March.
  5. Lakatos, Csilla & Terrie Walmsley, 2010. "A Global Multi-sector Multi-region Foreign Direct Investment Database for GTAP," GTAP Research Memoranda 3197, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
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Cited by:
  1. Patrick Georges, 2012. "Trade Diversification Away from the U.S. or North American Customs Union? A Review of Canada’s Trade Policy Options," Working Papers 1205E, University of Ottawa, Department of Economics.

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