| Trade liberalization across
the Americas holds the potential to substantially improve living standards
and present a successful model of North-South regionalism. In this paper,
we use a global CGE model to assess the effects of such an arrangement for
both member and non-member economies. We also evaluate a number of other
issues, including incentive compatibility of the regional agreement for
individual members and its structural compatibility with the larger agenda
of global trade liberalization. Our results support the notion that regionalism
in the Americas is beneficial to member economies, but we note important
ways in which it may diverge from the path to global free trade. Generally
speaking, our results reveal the complexity of adjustments and indirect
effects arising from large trade initiatives of this kind. This serves to
remind policy makers of the advantage of detailed empirical analysis over
simplified theory, general rules of thumb, or intuition alone. |
Abstract |
