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  3. American Economic Review
  4. September 2004
  5. The Long and Short of the Canada-U. S. Free Trade Agreement

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

The Long and Short of the Canada-U. S. Free Trade Agreement

  • Daniel Trefler
American Economic Review
vol. 94, no. 4, September 2004
(pp. 870–895)
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Abstract

The Canada-U. S. Free Trade Agreement 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, the contraction of low-productivity plants reduced employment by 12 percent while raising industrylevel labor productivity by 15 percent. For industries that experienced the largest U. S. tariff cuts, plant-level labor 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).

Citation

Trefler, Daniel. 2004. "The Long and Short of the Canada-U. S. Free Trade Agreement." American Economic Review 94 (4): 870–895. DOI: 10.1257/0002828042002633

JEL Classification

  • D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
  • F13 Trade Policy; International Trade Organizations
  • F14 Empirical Studies of Trade
  • F15 Economic Integration
  • F16 Trade and Labor Market Interactions