Study: NAFTA Raised Pay Here and Abroad (Washington Post)
The Center for Global Development is referenced in a Washington Post article on NAFTA.
It’s easy to forget that in 2008, Barack Obama ran on a pledge to renegotiate the North American Free Trade Agreement (NAFTA), which effectively eliminated tariffs and sharply reduced other trade barriers between the United States, Canada and Mexico.
That idea was scuttled pretty quickly, with future CEA chair Austan Goolsbee reportedly disavowing the pledge in talks with Canadian officials during the campaign, and by April of 2009, the U.S. trade representative, Ron Kirk, was telling reporters it wasn’t going to happen. And a new study suggests that might be just as well.
Economists Lorenzo Caliendo of Yale and Fernando Parro of the Federal Reserve built a trade model to analyze how the agreement changed the level of trade between the three countries and their residents’ welfare levels. They find that the effects of NAFTA dwarf those of any other agreement, with greater effects than all other tariff reductions undertaken by the three countries put together.
This is the pattern generally with trade liberalization. All else being equal, all parties tend to benefit, but developing countries benefit most. That’s why global development advocates at institutions like the Center for Global Development have been pushing hard for the Obama administration to eliminate barriers that harm export industries in poor countries.
