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American Economic Review: Vol. 94 No. 4 (September 2004)

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

Article Citation

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

DOI: 10.1257/0002828042002633

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).

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Trefler, Daniel


American Economic Review



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