All of us seeking respite from the highly partisan, often surreal shouting matches over trade policy are deeply in debt to Hufbauer and Schott for this definitive, comprehensive assessment of the North American Free Trade Agreement's first decade. Nimbly dissecting virtually every numerical study of NAFTA, they reason that the trade accord has achieved its benchmark economic goals -- spurring competition in domestic markets, doubling merchandise trade, boosting direct investment -- and then proceed to deflate exaggerated claims that it has had major effects on either employment or wages. Recognizing that NAFTA's labor and environmental institutions and dispute-resolution mechanisms were badly shortchanged, the authors also recommend doubling the capital of the North American Development Bank and creating a unified (and fortified) NAFTA headquarters. Hufbauer and Schott toss out a basketful of market-based yet politically savvy proposals to deepen North American integration -- a common external tariff, Mexican nonvoting participation in Federal Reserve Board meetings, common visa standards for non-NAFTA visitors, an independent trilateral monitoring board to promote core labor standards, an annual environmental report card to spotlight glaring deficiencies -- but, bowing to vested interests and nationalist sentiments in all three member countries, stop short of the more ambitious "North American Community" vision. Every international economist will want a copy of this exemplary analysis of public policy on his or her bookshelf.
Get the latest book reviews delivered to your inbox.
More Reviews on Western Hemisphere From This Issue