NAFTA: An Assessment

In This Review

NAFTA: An Assessment

By Gary Clyde Hufbauer and Jeffrey J. Schott
Institute for International Economics, 1993
164 pp. $0.00
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This book describes and evaluates the North American Free Trade Agreement in light of the authors' assessment and recommendations for NAFTA in their North American Free Trade: Issues and Recommendations, published before conclusion of the negotiations. Professorially, they give the negotiated agreement an overall mark of B+, an average of components that range from C (for safeguards) to A (for agriculture, transportation and dispute settlement). Their work has already helped shape the debate on NAFTA, particularly their plausible finding that during the remainder of the 1990s NAFTA is likely to have a positive effect on employment in the United States, both quantitatively and qualitatively. The reason is simple: with NAFTA, capital-starved Mexico is likely to have an investment boom, run a trade deficit and import many American goods, especially investment goods. Without NAFTA, the Mexican economy will languish and may even have a financial crisis. Of course, some Americans, as well as many Mexicans, will have to adjust to eventual free trade between the two countries. But the adjustments required will be tiny, well under one percent, the size of the adjustments required continually in the U.S. economy by technological change and internal competition. This book offers a clear, cogent and persuasive analysis of a complex and politically charged topic.

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