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NAFTA Revisited: Achievements and Challenges
     

NAFTA Revisited: Achievements and Challenges

by Gary Clyde Hufbauer
 

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NAFTA entered into force in 1994 after a bitter Congressional debate. But NAFTA in operation has proved no less controversial than NAFTA before ratification, for both supporters and opponents of trade liberalization have cited experience with the agreement to justify their positions. To provide a factual basis for this ongoing debate, the authors evaluate NAFTA’s

Overview

NAFTA entered into force in 1994 after a bitter Congressional debate. But NAFTA in operation has proved no less controversial than NAFTA before ratification, for both supporters and opponents of trade liberalization have cited experience with the agreement to justify their positions. To provide a factual basis for this ongoing debate, the authors evaluate NAFTA’s performance since its inception, comparing actual experience with both the objectives of the agreement’s supporters and the charges of its critics. They examine future challenges and opportunities in the trade and investment relationships among the three partner countries and the broader implications for new trade initiatives throughout the hemisphere. Chapter 1 describes trade, investment, and macroeconomic developments under NAFTA, beginning inauspiciously with the Mexican economic crisis of 1994 but moving on to impressive growth in trilateral trade and Mexican GDP. Chapter 2 traces the implementation of NAFTA’s dispute settlement provisions and the progress to date in implementing reforms. Chapter 3 distills and updates the findings from NAFTA and the Environment: Seven Years Later and recommends how to improve the performance of NAFTA’s institutions in addressing environmental problems. Chapter 4 undertakes a similar assessment of the operations of the North American Agreement on Labor Cooperation and the impact of NAFTA on employment and wages in the region. Chapters 5 and 6 examine integration in the North American auto and energy markets. The final chapter looks forward and focuses on the challenges facing North American economic integration on important issues such as immigration, environment, energy, and exchange rates.

Editorial Reviews

Foreign Affairs
All of us seeking respite from the highly partisan, often surreal shouting matches over trade policy are deeply in debt to Hufbauer and Schott for this definitive, comprehensive assessment of the North American Free Trade Agreement's first decade. Nimbly dissecting virtually every numerical study of NAFTA, they reason that the trade accord has achieved its benchmark economic goals — spurring competition in domestic markets, doubling merchandise trade, boosting direct investment — and then proceed to deflate exaggerated claims that it has had major effects on either employment or wages. Recognizing that NAFTA's labor and environmental institutions and dispute-resolution mechanisms were badly shortchanged, the authors also recommend doubling the capital of the North American Development Bank and creating a unified (and fortified) NAFTA headquarters. Hufbauer and Schott toss out a basketful of market-based yet politically savvy proposals to deepen North American integration — a common external tariff, Mexican nonvoting participation in Federal Reserve Board meetings, common visa standards for non-NAFTA visitors, an independent trilateral monitoring board to promote core labor standards, an annual environmental report card to spotlight glaring deficiencies — but, bowing to vested interests and nationalist sentiments in all three member countries, stop short of the more ambitious "North American Community" vision. Every international economist will want a copy of this exemplary analysis of public policy on his or her bookshelf.
Choice
This is an excellent introduction to the economics of the agreement and will serve as a useful reference for those seeking to learn more about NAFTA. Highly Recommended.

Product Details

ISBN-13:
9780881324471
Publisher:
Peterson Institute for International Economics
Publication date:
10/15/2005
Sold by:
Barnes & Noble
Format:
NOOK Book
File size:
12 MB
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Meet the Author

Gary Clyde Hufbauer, Reginald Jones Senior Fellow since 1992, was formerly the Maurice Greenberg Chair and Director of Studies at the Council on Foreign Relations (1996–98), the Marcus Wallenberg Professor of International Finance Diplomacy at Georgetown University (1985–92), senior fellow at the Institute (1981–85), deputy director of the International Law Institute at Georgetown University (1979–81); deputy assistant secretary for international trade and investment policy of the US Treasury (1977–79); and director of the international tax staff at the Treasury (1974–76).

Erika Wada, former visiting fellow at the Peterson Institute, is a PhD candidate at Michigan State University. She is coauthor of Local Content Requirements: A Global Problem (2013) and The Benefits of Price Convergence: Speculative Calculations (2002) and coeditor of Unfinished Business: Telecommunications after the Uruguay Round (1997).

Tony Warren assisted on this project while teaching at the Australian National University.

Jeffrey J. Schott joined the Peterson Institute for International Economics in 1983 and is a senior fellow working on international trade policy and economic sanctions. Durgaing his tenure at the Institute, Schott was also a visiting lecturer at Princeton University (1994) and an adjunct professor at Georgetown University (1986–88). He was a senior associate at the Carnegie Endowment for International Peace (1982–83) and an official of the US Treasury Department (1974–82) in international trade and energy policy. Durgaing the Tokyo Round of multilateral trade negotiations, he was a member of the US delegation that negotiated the GATT Subsidies Code. Since January 2003, he has been a member of the Trade and Environment Policy Advisory Committee of the US government. He is also a member of the State Department's Advisory Committee on International Economic Policy.

Paul L. E. Grieco, doctoral student at Northwestern University's Department of Economics, was a research assistant at the Institute for International Economics.

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