Premium
OF MICE AND ELEPHANTS: THE CANADA‐U.S. FREE TRADE AGREEMENT
Author(s) -
COPELAND BRIAN R.
Publication year - 1989
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/j.1465-7287.1989.tb00568.x
Subject(s) - free trade , economics , presumption , free trade agreement , international economics , rationalization (economics) , international trade , liberalization , trade barrier , international free trade agreement , welfare , bilateral trade , position (finance) , negotiation , political science , market economy , microeconomics , law , finance , china
This paper critically assesses the free trade agreement between Canada and the United States. Reviewing the theoretical literature on the gains from trade and the empirical literature on bilateral trade liberalization reveals that no presumption should exist that bilateral free trade would significantly improve Canada's welfare. Moreover, because of uncertainty over future abrogation or contingent protection actions, much of the predicted rationalization of Canadian industry may not occur. If, on the other hand, firms in Canada make major investments to take advantage of the agreement, Canada's bargaining position with the United States on trade and other issues could be weakened.