This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  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)
Download Full Text PDF

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