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NAFTA and the geography of North American trade

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  • Howard J. Wall

Abstract

Debates over the desirability of a preferential trading area frequently begin with the supposition that it will have two effects on the volume of trade: It will increase trade between members of the trading area and decrease trade between members and nonmembers. This paper demonstrates, however, that at the regional level the effects of the North American Free Trade Agreement (NAFTA) might have been much more complicated than what is normally supposed. Specifically, according to gravity model estimates, 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. The model also indicates that NAFTA has decreased trade between Canadian regions and both Europe and Asia, while increasing Mexico?s trade with Asia.

Suggested Citation

  • Howard J. Wall, 2003. "NAFTA and the geography of North American trade," Review, Federal Reserve Bank of St. Louis, vol. 85(Mar), pages 13-26.
    • Handle: RePEc:fip:fedlrv:y:2003:i:mar:p:13-26:n:v.85no.2
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    2. Enzo Dalmazzo-Bermejo & Bárbara Valenzuela-Klagges & Luis Espinoza-Brito, 2017. "Producción de energía renovable no tradicional en América Latina: economía y políticas públicas," Apuntes. Revista de ciencias sociales, Fondo Editorial, Universidad del Pacífico, vol. 44(81), pages 67-87.
    3. Howard J. Wall, 2002. "Has Japan been left out in the cold by regional integration?," Review, Federal Reserve Bank of St. Louis, vol. 84(Sep), pages 25-36.
    4. Valenzuela-Klagges, Bárbara & Corvalán-Quiroz, Alejandro & Fuenzalida-O'Shee, Darcy, 2018. "Trade facilitation and its effects on Chile’s bilateral trade between 2006 and 2014," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    5. I-Hui Cheng & Howard J. Wall, 2005. "Controlling for heterogeneity in gravity models of trade and integration," Review, Federal Reserve Bank of St. Louis, vol. 87(Jan), pages 49-63.
    6. Erick Elder & Mark Funk & Ashvin Vibhakar & Vincent W. Yao, 2006. "Intra-NAFTA trade and surface traffic: a very disaggregated view," Regional Economic Development, Federal Reserve Bank of St. Louis, issue Oct, pages 87-99.
    7. Cardamone, Paola, 2007. "A Survey of the Assessments of the Effectiveness of Preferential Trade Agreements using Gravity Models," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 60(4), pages 421-473.
    8. Lucian Cernat, 2001. "ASSESSING REGIONAL TRADE ARRANGEMENTS: ARE SOUTH–SOUTH RTAs MORE TRADE DIVERTING?," International Trade 0109001, University Library of Munich, Germany.
    9. Enzo Dalmazzo-Bermejo & Bárbara Valenzuela-Klagges & Luis Espinoza-Brito, 2017. "Production of non-traditional renewable energy in Latin America: economy and public policies," Apuntes. Revista de ciencias sociales, Fondo Editorial, Universidad del Pacífico, vol. 44(81), pages 63-82.
    10. John Romalis, 2007. "NAFTA's and CUSFTA's Impact on International Trade," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 416-435, August.
    11. Jagdambe, Subhash & Kannan, Elumalai, 2020. "Effects of ASEAN-India Free Trade Agreement on agricultural trade: The gravity model approach," World Development Perspectives, Elsevier, vol. 19(C).
    12. Yeboah, Osei-Agyeman & Malik, Mostafa & Thompson, Henry, 2004. "Ftaa And North Carolina: Income Redistribution Across Labor Groups," 2004 Annual meeting, August 1-4, Denver, CO 20380, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. (ed.), 0. "Research Handbook on Economic Diplomacy," Books, Edward Elgar Publishing, number 16053.
    14. Martin Andresen, 2009. "The geographical effects of the NAFTA on Canadian provinces," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 43(1), pages 251-265, March.

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