Repealing NAFTA: The impact on international trade with focus on Mexico
| Thesis title in Czech: | Zrušení NAFTA: Dopady na mezinárodní obchod se zaměřením na Mexiko |
|---|---|
| Thesis title in English: | Repealing NAFTA: The impact on international trade with focus on Mexico |
| Key words: | international trade, international economics, trade policy, NAFTA, Mexico, the United States, computable general equilibrium, GTAP |
| English key words: | international trade, international economics, trade policy, NAFTA, Mexico, the United States, computable general equilibrium, GTAP |
| Academic year of topic announcement: | 2016/2017 |
| Thesis type: | Bachelor's thesis |
| Thesis language: | angličtina |
| Department: | Institute of Economic Studies (23-IES) |
| Supervisor: | Ing. Vilém Semerák, M.A., Ph.D. |
| Author: | hidden - assigned by the advisor |
| Date of registration: | 27.01.2017 |
| Date of assignment: | 27.01.2017 |
| Date and time of defence: | 11.06.2018 09:00 |
| Venue of defence: | Opletalova - Opletalova 26, O206, Opletalova - místn. č. 206 |
| Date of electronic submission: | 07.05.2018 |
| Date of proceeded defence: | 11.06.2018 |
| Opponents: | Mgr. Alina Cazachevici |
| URKUND check: | |
| References |
| 1. Hufbauer, G. C. (2005). NAFTA revisited: Achievements and challenges. Peterson Institute.
2. Lederman, D., Maloney, W. F., Maloney, W. F., & Serven, L. (2005). Lessons from NAFTA for Latin America and the Caribbean. Stanford University Press. 3. Hertel, T. W. (1997). Global trade analysis: modeling and applications. Cambridge university press. 4. De La Cruz, J., & Riker, D., & Voorhees, B. (2013). Econometric Estimates of the Effects of NAFTA: A Review of the Literature. U.S. International Trade Commission. 5. Romalis, J. (2007). NAFTA's and CUSFTA's Impact on International Trade. The Review of Economics and Statistics, 89(3), 416-435. 6. Caliendo, L., & Parro, F. (2014). Estimates of the Trade and Welfare Effects of NAFTA. The Review of Economic Studies, rdu035. 7. Esquivel, G., & Rodrıguez-López, J. A. (2003). Technology, trade, and wage inequality in Mexico before and after NAFTA. Journal of Development Economics, 72(2), 543-565. 8. Hanson, G. H. (2003). What has happened to wages in Mexico since NAFTA? (No. w9563). National Bureau of Economic Research. |
| Preliminary scope of work |
| Motivation:
Three days after his inauguration as the 45th President of the United States, Donald Trump fulfilled his campaign promise and officially withdrew from the Trans-Pacific Partnership (TPP) trade agreement. President Trump’s stance on trade and immigration policy raises new questions on the future of international trade. This thesis will focus on the North American Free Trade Agreement (NAFTA), a pact established in 1994 eliminating tariff and non-tariff barriers of international trade among its three member countries: Canada, the United States and Mexico. More specifically, the thesis will aim to analyze the theoretical impact of repealing the agreement today, 23 years after its entry into force, using a computable general equilibrium model along with the most recent data. The simulation will assume that tariff rates between Canada, the United States and Mexico would increase (more precisely non-decrease) to the Most Favoured Nation tariff rate. Previous studies analyzing the impact of NAFTA have concluded that the agreement had a significant effect on trade volumes within member countries, but only a small impact on their real wages and welfare. (Romalis, 2007; Caliendo & Parro, 2014). With the ratification of NAFTA, Mexico became the first developing country to establish a free trade agreement with developed countries. It has since experienced growth in terms of GDP and wage levels, but also a significant increase in income inequality and in regional wage differences favoring regions near the Mexico-US border. The contribution of NAFTA to these trends will be estimated using the above-mentioned model and compared with the conclusions of the existing literature. Research questions: - How would repealing NAFTA impact international trade flows, wealth of countries involved and other key factors? - Did the agreement contribute to the growing inequality among skilled/unskilled workers and among regions in Mexico, and if yes, could its repeal actually help in addressing these issues? Methodology: To model the impact of repealing NAFTA I will use the GTAP Model, a computable general equilibrium model which is part of the Global Trade Analysis Project. The latest version 6.2a will be used along with the RunGTAP interface. The general equilibrium is estimated using GEMPACK, an economic modelling software suitable for solving large systems of equations. Contribution: Over the years, many researches have been estimating the effects of NAFTA on various aspects of member states’ economies. The aim of this thesis will be to complement the existing literature by using the most recent model and data, and by looking at the issue from a different perspective. In the conclusion, I will compare the results with other studies in this area and discuss potential differences. By describing the characteristics of and the theory behind the GTAP Model, this thesis can also serve as a comprehensible introduction for students interested in using this model for policy analysis on other issues. Outline: 1. Introduction 2. Methods used 3. Literature review 4. Policy change 5. Results 6. Conclusion |
| Preliminary scope of work in English |
| Motivation:
Three days after his inauguration as the 45th President of the United States, Donald Trump fulfilled his campaign promise and officially withdrew from the Trans-Pacific Partnership (TPP) trade agreement. President Trump’s stance on trade and immigration policy raises new questions on the future of international trade. This thesis will focus on the North American Free Trade Agreement (NAFTA), a pact established in 1994 eliminating tariff and non-tariff barriers of international trade among its three member countries: Canada, the United States and Mexico. More specifically, the thesis will aim to analyze the theoretical impact of repealing the agreement today, 23 years after its entry into force, using a computable general equilibrium model along with the most recent data. The simulation will assume that tariff rates between Canada, the United States and Mexico would increase (more precisely non-decrease) to the Most Favoured Nation tariff rate. Previous studies analyzing the impact of NAFTA have concluded that the agreement had a significant effect on trade volumes within member countries, but only a small impact on their real wages and welfare. (Romalis, 2007; Caliendo & Parro, 2014). With the ratification of NAFTA, Mexico became the first developing country to establish a free trade agreement with developed countries. It has since experienced growth in terms of GDP and wage levels, but also a significant increase in income inequality and in regional wage differences favoring regions near the Mexico-US border. The contribution of NAFTA to these trends will be estimated using the above-mentioned model and compared with the conclusions of the existing literature. Research questions: - How would repealing NAFTA impact international trade flows, wealth of countries involved and other key factors? - Did the agreement contribute to the growing inequality among skilled/unskilled workers and among regions in Mexico, and if yes, could its repeal actually help in addressing these issues? Methodology: To model the impact of repealing NAFTA I will use the GTAP Model, a computable general equilibrium model which is part of the Global Trade Analysis Project. The latest version 6.2a will be used along with the RunGTAP interface. The general equilibrium is estimated using GEMPACK, an economic modelling software suitable for solving large systems of equations. Contribution: Over the years, many researches have been estimating the effects of NAFTA on various aspects of member states’ economies. The aim of this thesis will be to complement the existing literature by using the most recent model and data, and by looking at the issue from a different perspective. In the conclusion, I will compare the results with other studies in this area and discuss potential differences. By describing the characteristics of and the theory behind the GTAP Model, this thesis can also serve as a comprehensible introduction for students interested in using this model for policy analysis on other issues. Outline: 1. Introduction 2. Methods used 3. Literature review 4. Policy change 5. Results 6. Conclusion |