We also discuss the approaches and conclusions of some relevant studies on the effects of NAFTA. But she didn't find much evidence that imports from the rest of the world fell as intra-NAFTA trade increased. Burfisher, Robinson, and Thierfelder (2001) provide a useful survey of the impact of NAFTA on the United States, covering both macroeconomic issues and structural adjustments.
Finally, Arndt and Huemer provide graphic evidence of the importance of offshore outsourcing from the United States to Mexico in particular and to Canada for motor vehicles, television sets, and textiles and clothing. It is also an increasing function of this country's allocation of the industry z-specific factor, which we assume to be constant over time. First, it will increase the relative import price (including tariff) of the non-member countries' product in the US.
The size of the second effect will be larger if the US is a major destination for third country exports. The third independent variable is the product of the percentage of exports of the good from each country to the United States in the total exports of that country in 1991 and the natural logarithm of one plus tariffs against each export. As we will report in the next section, az,3, the estimated coefficients for the product of the percentage of exports of the commodity from each country to the United States in the total exports of that country in 1991 and the natural logarithm of one plus the tariffs for each export are not significant and do not have the expected negative sign in many goods.
We expect positive signals for the coefficients of the NAFTA dummy and the lagged NAFTA dummy.
Empirical Results
To take this into account, we have also estimated the above equations for selected industries at the 4-digit HS level from 1992 to 1998. It appears that for textiles and clothing products, which include HS 51 Wool and Animal Hair, including yarn and Woven fabric, cotton HS 52, including yarn and woven fabric thereof, knitted or crocheted fabric HS 60 and articles of clothing and accessories HS 62, not knitted etc., USA. Therefore, we conclude, based on Figure 1 and our regression results in Table 1 , that the creation of NAFTA had significant trade diversion effects in the US.
As already mentioned, it is possible that goods defined by HS 2-digit codes may be too broad and include too many goods with different characteristics to allow a thorough analysis. To account for this, we have also estimated our equations for selected goods at the HS 4-digit level from 1992 to 1998. The goods are selected following James and Umemoto, who focused on such labour-intensive goods as textiles, clothing, leather products and footwear and electronic products.
We also included cars and vehicles as they were subject to a rule of origin as mentioned earlier. HS 6109 T-shirts, anklets, tank tops, etc., knitted or crocheted HS 6115 pantyhose, socks and other stockings, knitted or crocheted HS 6401 Waterproof Footwear, Rubber or Plastic, Bond Sole HS 8529 TV receivers, Incl. To account for the gradual phase-out of NAFTA tariffs over time, we also used a lagged NAFTA dummy, which takes the value for Canada and Mexico afterward.
In the case of the auto trade, the United States had already liberalized its imports from Canada before NAFTA. To account for this, we used a Mexico dummy, which takes the value one for Mexico after 1994 for “cars and vehicles” regressions. For almost all commodities, Canada and Mexico received significant margins of preference after NAFTA, and it is clear that NAFTA tariffs were gradually eliminated over time.
We should further note that the rates were very low in the case of "television receivers" and "motor cars". Figure 2 shows that in the case of clothing, such as "T-shirts" and "socks" and "TV receivers" and "motor vehicles", Mexico increased its share in the United States. It is clear that both tariffs and the NAFTA dummies are generally important. Thus, it appears from these more disaggregated results that NAFTA has resulted in significant trade diversion, particularly in textiles, clothing and certain footwear products.
Conclusions and Implications for Further Research
Our research and some of the other studies we noted demonstrate the importance of commodity disaggregation in analyzing the effects of preferential trade arrangements as well as the need to consider how foreign direct investment and outsourcing with tariff preferences interact with tariff preferences in influencing trade patterns. could have worked. and specialization in the NAFTA and non-NAFTA countries. North American Trade After NAFTA: Part I, Part II, and Part III,” Claremont Policy Briefs, Issue No. The Generalized Gravity Equation, Monopolistic Competition, and the Factor Proportions Theory of International Trade,” Review of Economics and Statistics 71:143 -53.
Has NAFTA Changed North American Trade?" Federal Reserve Bank of Dallas, Economic Review, First Quarter, pp. Rules of Origin and the Competitive Position of Asian Textile and Apparel Manufacturers in the North American Market," ICSEAD Working Paper Series, Vol. NAFTA Trade with East Asia: Rules of Origin and Market Access for Textiles, Apparel, Footwear and Electrical Machinery,” ASEAN Economic Bulletin 17:293-309.
Een industriële analyse van handelscreatie en afleidingseffecten van NAFTA”, Journal of Economic Integration 13: 400-25. Free Trade Agreements as Protectionist Devices: Rules of Origin”, National Bureau of Economic Research, Working Paper 4342. Trade Creation and Trade Diversion under NAFTA”, National Bureau of Economic Research, Working Paper 7429 (december).
Monte Carlo evidence on the choice between sample selection and binomial models," Journal of Econometrics 35:59-82. Has Japan been left out in the cold of regional integration?" Federal Reserve Bank of St. 6109 T-SHIRTS, SINGLETS, TANK TOPS, ETC, KNITTED OR CROCHETED 6115 T-SHIRTS, SOCKS AND OTHER JERSEYS, KNITTED OR CROCHETED 6401 WATERPROOF FOOTWEAR, RUBBER OR CROCHETED 85 PROJECTORS 8703 MOTOR CARS AND VEHICLES FOR THE TRANSPORT OF PERSONS.
