The long and short of the Canada-U.S. free trade agreement

Daniel Trefler

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: The Canada-U.S. Free Trade Agreement (FTA) provides a unique window onto the effects of a reciprocal trade agreement on an industrialized economy (Canada). For industries that experienced the deepest Canadian tariff cuts, employment fell by 12 percent and labour productivity rose by 15 percent as low-productivity plants contracted. For industries that received the largest U.S. tariff cuts, there were no employment gains, but plant-level labour productivity soared by 14 percent. These results highlight the conflict between those who bore the short-run adjustment costs (displaced workers and struggling plants) and those who are garnering the long-run gains (consumers and efficient plants). Finally, a simple welfare analysis provides evidence of aggregate welfare gains.

JEL-codes: J01 L81 R14 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2006-01
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http://eprints.lse.ac.uk/6721/ Open access version. (application/pdf)

Related works:
Working Paper: The Long and Short of the Canada-U.S. Free Trade Agreement (2006)
Journal Article: The Long and Short of the Canada-U. S. Free Trade Agreement (2004)
Working Paper: The Long and Short of the Canada-U.S. Free Trade Agreement (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:6721

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