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Canada’s Trade Policy Options under Donald Trump: NAFTA’s rules of origin, Canada-U.S. security perimeter, and Canada’s geographical trade diversification opportunities

Author

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  • Patrick Georges

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

Abstract

This paper analyses the trade policy options of Canada under Trump and reviews some arguments that have been made by economists and others in the current debate surrounding U.S. return to protectionism and mercantilism. For Canada, both imports and exports are vital, and trade with the U.S. and with the rest of the world is of key importance. The new mercantilist position of the U.S. administration under Trump requires Canada to reflect on how to communicate the Canada-U.S. trade relation in terms of win-win strategies. A good starting point for this exercise, however, is to emphasize that NAFTA, as a trade preferential arrangement, is not as valuable as it used to be in the 1990s because NAFTA margins of preferences are no more sufficiently attractive to offset the cost of complying with NAFTA Rules of Origins requirements. Second, Canada-U.S. border security measures introduced after the terrorist attacks of 2001 have also offset NAFTA’s tariff preferences. Finally, the paper discusses the benefits of diversifying Canada’s trade geographically in a world where North America has become a smaller share of the global pie.

Suggested Citation

  • Patrick Georges, 2017. "Canada’s Trade Policy Options under Donald Trump: NAFTA’s rules of origin, Canada-U.S. security perimeter, and Canada’s geographical trade diversification opportunities," Working Papers 1707E, University of Ottawa, Department of Economics.
  • Handle: RePEc:ott:wpaper:1707e
    as

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    References listed on IDEAS

    as
    1. Georges, Patrick & Lisenkova, Katerina & Mérette, Marcel, 2013. "Can the ageing North benefit from expanding trade with the South?," Economic Modelling, Elsevier, vol. 35(C), pages 990-998.
    2. Anne O. Krueger, 1993. "Free Trade Agreements as Protectionist Devices: Rules of Origin," NBER Working Papers 4352, National Bureau of Economic Research, Inc.
    3. Patrick Georges & Marcel Mérette & Aylin Seckin§, 2009. "Should Canada Diversify its Trade Pattern? An Overlapping- Generations CGE Analysis of Trade and Ageing," Working Papers 0906E, University of Ottawa, Department of Economics.
    4. Kala Krishna, 2005. "Understanding Rules of Origin," NBER Working Papers 11150, National Bureau of Economic Research, Inc.
    5. Kala Krishna & Anne Krueger, 1995. "Implementing Free Trade Areas: Rules of Origin and Hidden Protection," NBER Working Papers 4983, National Bureau of Economic Research, Inc.
    6. Daron Acemoglu & Jaume Ventura, 2002. "The World Income Distribution," The Quarterly Journal of Economics, Oxford University Press, vol. 117(2), pages 659-694.
    7. Steven J. Davis & Till Von Wachter, 2011. "Recessions and the Costs of Job Loss," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 42(2 (Fall)), pages 1-72.
    8. Ghosh, Madanmohan & Rao, Someshwar, 2005. "A Canada-U.S. customs union: Potential economic impacts in NAFTA countries," Journal of Policy Modeling, Elsevier, vol. 27(7), pages 805-827, October.
    9. Patrick Georges, 2008. "Liberalizing NAFTA Rules of Origin: A Dynamic CGE Analysis," Review of International Economics, Wiley Blackwell, vol. 16(4), pages 672-691, September.
    10. Georges, Patrick & Mérette, Marcel, 2012. "Toward a North American Security Perimeter? Assessing the trade, FDI, and welfare impacts of liberalizing 9/11 security measures," Economic Modelling, Elsevier, vol. 29(6), pages 2514-2526.
    11. Céline Carrère & Jaime de Melo, 2015. "Are Different Rules of Origin Equally Costly? Estimates from NAFTA," World Scientific Book Chapters, in: Developing Countries in the World Economy, chapter 12, pages 277-298, World Scientific Publishing Co. Pte. Ltd..
    12. 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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    14. repec:idb:brikps:16558 is not listed on IDEAS
    15. P. J. Lloyd, 1993. "A Tariff Substitute for Rules of Origin in Free Trade Areas," The World Economy, Wiley Blackwell, vol. 16(6), pages 699-712, November.
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    18. 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.
    19. Mérette Marcel & Georges Patrick, 2010. "Demographic Changes and the Gains from Globalisation: An Analysis of Ageing, Capital Flows, and International Trade," Global Economy Journal, De Gruyter, vol. 10(3), pages 1-39, October.
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    Cited by:

    1. Refk Selmi & Jamal Bouoiyour & Shawkat Hammoudeh, 2020. "Common and country-specific uncertainty fluctuations in oil-producing countries : Measures, macroeconomic effects and policy challenges," Post-Print hal-02929898, HAL.
    2. Jamal Bouoiyour & Refk Selmi, 2019. "The Qatar-Gulf Crisis and Risk Management in Oil and Gas Markets," Working Papers hal-02101633, HAL.

    More about this item

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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