Free Trade in the Americas

Free Trade in the Americas

Economic and Political Issues for Governments and Firms

New Horizons in International Business series

Edited by Sidney Weintraub, Alan M. Rugman and Gavin Boyd

This book examines the Free Trade Area of the Americas (FTAA), an ambitious venture in regional market integration which builds on the principles of the North American Free Trade Agreement. It assesses the long-term corporate and public policy measures to cope with the increased monetary, fiscal and structural interdependence that will be required if the benefits of the FTAA are to be realized.

Chapter 5: What institutional design for North America?

Gordon Mace and Louis Bélanger

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


Gordon Mace and Louis Bélanger1 The North American Free Trade Agreement (NAFTA) is now ten years old. It was born in the context of an acute political debate, particularly in the United States, concerning its potential benefits. After ten years of implementing the accord, there are still opposing views concerning its effects. Apparently, NAFTA had a positive impact on the economies of the three member countries at the macroeconomic level but farmers in Mexico are severely hit and the Mexican government is now thinking of asking for changes in the agreement.2 Although it is still difficult to assess all the economic, political and social consequences of the agreement, which took effect in January 1994, there is no doubt that it has greatly altered the geo-economic environment of North America. Since the early 1990s, much academic literature has been produced on various aspects of NAFTA. The bulk of this literature has dealt with the general economic impact of the agreement and its specific costs and benefits for the three member countries as well as for their economic sectors.3 Another part of the literature has a more general focus, reflecting on the wider contours of North American regionalism.4 This includes important analyses of the political aspects of NAFTA, the role of political parties,5 national legislatures and more particularly the US Congress,6 and the negotiation process that led to the signing of the agreement.7 Authors have also examined various other aspects and dimensions of North American integration such as the...

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