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

  • 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)

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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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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Web page: http://www.socialsciences.uottawa.ca/eco/eng/index.asp
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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. 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.
  3. 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.
  4. 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.
  5. Patrick GEORGES & Marcel MERETTE & Yazid DISSOU, . "Liberalizing Foreign Direct Investment Restrictions in Canada: A Multi-Country Computable General Equilibrium Analysis," EcoMod2008 23800043, EcoMod.
  6. Patrick Georges, 2010. "Dispensing with NAFTA Rules of Origin? Some Policy Options," The World Economy, Wiley Blackwell, vol. 33(11), pages 1606-1637, November.
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