An Industrial Analysis of Trade Creation and Diversion Effects of NAFTA

Karemera, David; Ojah, Kalu

doi:10.11130/jei.1998.13.3.400

Cited by 21 publications

(12 citation statements)

References 10 publications

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“…She finds that the agreement had substantial trade creation effects, with little evidence of diversion. Wylie and Wylie (1996) and Karemera and Ojah (1998) find similar results for NAFTA. 8 Brown's perspective contradicts Bhagwati and Panagariya (1996) who argue that the same conditions -high trade shares with the USA and high tariffs -mean Mexico loses from NAFTA because of trade diversion and the loss of tariff revenue (p. 18).…”

Section: Empirical Evidencesupporting

confidence: 52%

Trade liberalisation and regional integration: the search for large numbers

Robinson¹,

Thierfelder

2002

Aus J Agri & Res Econ

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We surveyed the empirical literature using multi-country computable general equilibrium (CGE) models to analyse potential and actual regional trade agreements (RTAs). The studies indicate that these RTAs improve welfare, that trade creation greatly exceeds trade diversion, and that they are consistent with further global liberalisation. The welfare gains are bigger when models incorporate aspects of ''new trade theory'' such as increasing returns, imperfect competition, and links between trade liberalisation, total factor productivity growth, and capital accumulation. We also conjectured that an RTA expands market size and stability, allowing firms to pursue economies of fine specialisation, generating additional ''Smithian'' efficiency gains.

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Section: Empirical Evidencesupporting

confidence: 52%

Trade liberalisation and regional integration: the search for large numbers

Robinson¹,

Thierfelder

2002

Aus J Agri & Res Econ

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“…Eliminating nontariff barriers, for instance, cannot reduce welfare through trade diversion because a nontariff barrier does not generate revenue for the government. The approach I take is similar to that of Karemera and Ojah (1998), who estimate import demand elasticities at the industry level and then use those elasticities to calculate the effects on trade of the removal of tariff barriers under the NAFTA. 8 If the importing country is small and the world market is fully integrated, then XS row will be horizontal at the world price (the export supply elasticity faced by the importer would be infinite).…”

Section: Which Countries Would Make the Ideal Rta Trading Partners?mentioning

confidence: 99%

The Increasing Irrelevance of Trade Diversion

Magee

2017

Kyklos

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Summary This paper is intended as a guide for policymakers considering new regional trade agreements. The data provided here show that only about a quarter of imports are potentially subject to trade diversion from new agreements (i.e. they come from countries outside of regional trading blocs and in industries with positive most‐favored nation tariffs). Since this percentage is steadily declining with the increasing number of regional trade agreements and the falling level of tariffs, trade diversion is becoming increasingly irrelevant as a concern for new trade deals. The paper also estimates how each potential new bilateral free trade agreement would affect a country's imports and exports, as well as whether the increased imports would replace domestic production, imports from other RTA partners, or imports from non‐RTA partners. In this way, the estimates are able to shed light on which countries make the best partners for new regional trade agreements. Finally, the paper provides estimates of the trade effects for two large potential new regional agreements: the Transatlantic Trade and Investment Partnership and the Trans‐Pacific Partnership.

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“…See also Karemara and Ojah (1998) States to Mexico especially and to Canada for motor vehicles, television sets, and textiles and apparel.…”

Section: Nafta In Context and A Review Of The Literaturementioning

confidence: 99%