North American Economic Integration

North American Economic Integration

Theory and Practice

Norris C. Clement, Gustavo del Castillo Vera, James Gerber, William A. Kerr, Alan J. MacFayden, Stanford Shedd, Eduardo Zepeda and Diana Alarcón

This highly accessible book explains the theoretical, historical and political background of the North American Free Trade Agreement (NAFTA), its impact and the debates surrounding its existence. In addition the authors provide a brief introduction to the theory of economic integration as well as a succinct overview of the evolution of the global economy, and the institutions that manage it, in the post World War II period.
Subjects: business and management, international business, economics and finance, international economics


  North American economic integration has, since January 1, 1994, focused on NAFTA itself and the three supplementary agreements. As noted in earlier chapters,  these agreements now provide the formal ‘rules of the game’ for further integration and for the resolution of disputes regarding trade and investment issues that  inevitably will arise over the course of time. The NAFTA document also provides procedures for expanding the three­country agreement by ‘widening’ (that is, adding  new countries) and/or ‘deepening’ (that is, adding new concepts like labor mobility or consultation on macroeconomic policies) to the process.  It is important to remember here that it is private firms that trade and invest, not governments. Governments negotiate (possibly in consultation with private firms and  their trade associations) international economic treaties which, in turn, create new ongoing institutions (that is, the NAFTA Free Trade Commission) which administer  the implementation and operation of the (transnational) treaty under which firms must operate as they buy from, sell to and invest in other countries. Additionally, it must  be remembered that in the case of NAFTA each of the three countries embraced the principles of the multilateral GATT/WTO, which implies that their (trilateral)  institutions and actions grew out of and must be consistent with those of a larger framework. Finally, implementation of an international economic treaty such as  NAFTA requires a higher level of harmonization of a myriad of customs procedures as well as business and legal practices as the economic borders between countries  are gradually dismantled­a practical, nuts...