The Long and Short of the Canada-U.S. Free Trade Agreement
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 industry-level 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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The first plant-level study of a trading partner's tariff reduction was Trefler's (2004) analysis of the Canada-US Free Trade Agreement.
“The first study of the impact of a trading partner's reduction in tariffs using plant-level data was Daniel Trefler's (2004) analysis of the Canada-US Free Trade Agreement.”
From Trade Liberalization, Exports, and Technology Upgrading: Evidence on the Impact of MERCOSUR on Argentinian Firms (2011) · cites this paper as Daniel Trefler's (2004)
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- Authors
- Trefler, D.
- Affiliations
- Canadian Institute for Advanced Research (CA)
- Corresponding author
- Trefler, Daniel
- ORCID
- Trefler, Daniel
- Venue
- American Economic Review
- Publisher
- American Economic Association
- Published
- 2004-09-01
- Volume
- 94
- Issue
- 4
- Pages
- 870-895
- ISSN
- 0002-8282 (ISSN-L)
- OpenAlex
- W3023641402
- Cited by
- 1,071
- References
- 43
- Citations by year
- 2026: 39 · 2025: 35 · 2024: 27 · 2023: 52 · 2022: 72 · 2021: 58 · 2020: 31 · 2019: 60 · 2018: 48 · 2017: 54 · 2016: 55 · 2015: 62 · 2014: 61 · 2013: 50 · 2012: 58
- FWCI
- 57.18
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- American Economic Review (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Global trade and economics
- Social Sciences › Political Science and International Relations › Canadian Policy and Governance
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Labor market dynamics and wage inequality
- Keywords
- Canada-United States Free Trade Agreement, reciprocal trade agreements, tariff reduction, employment effects, industrial restructuring, displaced workers, adjustment costs, deindustrialization
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