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.

Chapter 7: North American Economic Integration: Trial by Fire

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

Subjects: business and management, international business, economics and finance, international economics

Extract

Page 253  7. North American Economic Integration: Trial by Fire  When the North American Free Trade Agreement went into effect on January 1, 1994, it raised the hopes of millions of people in Mexico, Canada and the United  States that the agreement would enhance production efficiency, create jobs and increase investment within the North American continent. Its chances for success­for a  successful conclusion to the negotiating process, for ratification by the respective legislative bodies of the three signatory countries, and for achieving its objectives­had  been enhanced by the global economic context, by economic opening already well under way in Mexico, and by the demonstration effects of a prior bilateral trade  agreement between Canada and the United States, CUSFTA.  However, adespite high expectations for a wide range of benefits to accrue through North American economic integration, NAFTA was flawed. Its imperfections did  not go unnoticed, but for a variety of reasons they were allowed to remain as part of the final document. These weaknesses will plague North America in the future and  hinder the operation of institutional instruments as the region attempts to integrate vastly asymmetrical economic systems. In this respect, NAFTA is predestined to  undergo a difficult implementation process­and ultimately to emerge as a working agreement born not out of cool mediation, but by trial by the fires of political,  economic and social interests.  Preceding chapters have dealt with the processes of economic integration in North America: exchanges of exports and imports, trade in services and so...

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