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The Effect of the Canada-US Free Trade Agreement on Canadian Multilateral Trade Liberalization

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  • Joseph Mai

    (Department of Economics, York University, Toronto, Canada)

  • Andrey Stoyanov

    (York University)

Abstract

In this paper show that the Canada-US Free Trade Agreement (CUSFTA) tari¤ preferences have triggered a decline in Canadian external tariffs, explaining a two percentage point reduction in the average tariff between 1989 and 1998. Next, we found that industries which generate the least export rent to the US firms experienced deeper tariff cuts in Canada; this result provides evidence of cooperation in trade policies between the US and Canada. Finally, we estimate the e¤ect of the CUSFTA on the intensity of industrial lobbying for trade policy in Canada and find no relationship between preferential trade liberalization and lobbying activity.

Suggested Citation

  • Joseph Mai & Andrey Stoyanov, 2014. "The Effect of the Canada-US Free Trade Agreement on Canadian Multilateral Trade Liberalization," Working Papers 2014_2, York University, Department of Economics.
    • Handle: RePEc:yca:wpaper:2014_2
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    Cited by:

    1. Crivelli, Pramila, 2016. "Regionalism and falling external protection in high and low tariff members," Journal of International Economics, Elsevier, vol. 102(C), pages 70-84.
    2. Yanase, Akihiko & Tsubuku, Masafumi, 2022. "Trade costs and free trade agreements: Implications for tariff complementarity and welfare," International Review of Economics & Finance, Elsevier, vol. 78(C), pages 23-37.
    3. Chad P. Bown & Patricia Tovar, 2016. "Preferential Liberalization, Antidumping, and Safeguards: Stumbling Block Evidence from MERCOSUR," Economics and Politics, Wiley Blackwell, vol. 28(3), pages 262-294, November.
    4. Jianxing Lyu & Sören Prehn & Yanjie Zhang & Thomas Glauben & Yinchu Zeng, 2021. "Trade creation, political sensitivity and product exclusions: the political economy of agriculture protection in China’s FTAs," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 65(3), pages 627-657, July.
    5. Saggi, Kamal & Wong, Woan Foong & Yildiz, Halis Murat, 2019. "Should the WTO require free trade agreements to eliminate internal tariffs?," Journal of International Economics, Elsevier, vol. 118(C), pages 316-330.
    6. Ornelas, Emanuel & Tovar, Patricia, 2022. "Intra-bloc tariffs and preferential margins in trade agreements," Journal of International Economics, Elsevier, vol. 138(C).
    7. Andrey Stoyanov, 2016. "Regional Trade Agreements and Cross-border Lobbying: Empirical Evidence from the Canada–US Free Trade Agreement Negotiations," Review of International Economics, Wiley Blackwell, vol. 24(1), pages 126-149, February.
    8. Maria Cipollina & Luca Salvatici, 2022. "The Dark Matter of Bilateral Preferential Margins: An Assessment of the Effect of US Tariffs," Sustainability, MDPI, vol. 14(8), pages 1-16, April.
    9. Kuenzel, David J. & Sharma, Rishi R., 2021. "Preferential trade agreements and MFN tariffs: Global evidence," European Economic Review, Elsevier, vol. 138(C).
    10. Lake, James & Linask, Maia K., 2016. "Could tariffs be pro-cyclical?," Journal of International Economics, Elsevier, vol. 103(C), pages 124-146.
    11. Stoyanov, Andrey & Yildiz, Halis Murat, 2015. "Preferential versus multilateral trade liberalization and the role of political economy," European Economic Review, Elsevier, vol. 80(C), pages 140-164.
    12. Erik Figueiredo & Luiz Renato Lima, 2020. "Do economic integration agreements affect trade predictability? A group effect analysis," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 53(2), pages 637-664, May.
    13. Ketterer, Tobias D. & Bernhofen, Daniel & Milner, Chris, 2014. "Preferences, rent destruction and multilateral liberalization: The building block effect of CUSFTA," Journal of International Economics, Elsevier, vol. 92(1), pages 63-77.
    14. Elie Appelbaum & Mark Melatos, 2018. "Are Customs Unions Really So Scarce?," The Economic Record, The Economic Society of Australia, vol. 94(307), pages 391-404, December.
    15. Mai, Joseph & Stoyanov, Andrey, 2018. "Tariff Cooperation in Free Trade Areas," MPRA Paper 84398, University Library of Munich, Germany.
    16. Tovar, Patricia, 2019. "Preferential and multilateral liberalization: Evidence from Latin America’s use of tariffs, antidumping and safeguards," Journal of Development Economics, Elsevier, vol. 141(C).

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    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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