1. NORTH AMERICAN FREE TRADE.
- Author
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Baer, M. Delal
- Subjects
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FREE trade , *INTERNATIONAL economic relations , *INTERNATIONAL competition , *ECONOMIC policy , *INTERNATIONAL trade ,NORTH American Free Trade Agreement - Abstract
This article discusses issues related to the decision of Canada, Mexico and the U.S. to negotiate a North American Free Trade Agreement on February 5, 1991. The trade agreement is the product of longstanding trends in both Mexico and Canada toward sharing production with U.S. companies. The decision to deepen and formalize these economic ties is a qualitative change that may prove politically challenging as well as economically rewarding. Advocates of open economic borders will have to compete with insular nationalists, ideas for innovative trinational cooperation with restrictive notions of sovereignty, liberalization with protectionism and market philosophies with residual populism. The trade agreement will enhance U.S. competitiveness versus Europe and Asia through the economies of scale and specialization in production to be achieved with continental rationalization. Trinational clarity of investment rules will provide a stable environment for long-term production strategies. Most attractive is the production-sharing option within North America. Production-sharing is a strategy that Asia and Europe have used to great advantage in penetrating U.S. markets. Japan, for example, has deliberately shifted labor-intensive production to less-developed neighbors in Asia.
- Published
- 1991