In general, a reduction in trade barriers will affect the environment by expanding the scale of economic activity, by altering the composition of economic activity and by initiating a change in the techniques of production. We present empirical evidence to assess the relative magnitudes of these three effects as they apply to further trade liberalization in Mexico. We first use comparable measures of three air pollutants in a cross-section of urban areas located in 42 countries to study the relationship between air quality and economic growth. We find for two pollutants (sulphur dioxide and 'smoke') that concentrations increase with per capita GDP at low levels of national income, but decrease with GDP growth at higher levels of income. We then study the determinants of the industry pattern of US imports from Mexico and of value added by Mexico's maquiladora sector. We investigate whether the size of pollution abatement costs in US industry influences the pattern of international trade and investment. Finally, we use the results from a computable general equilibrium model to study the likely compositional effect of a North American Free Trade Agreement (NAFTA) on pollution in Mexico.

The seven contributions in this book examine the potential impact of a North American Free Trade Agreement (NAFTA) with Mexico on the U.S. economy. They cover such key aspects as the general sources of comparative advantage between Mexico and the U.S., regional and local effects on production and employment, and the effect on production in particular industries. The authors start from the premise that the trade agreement will have a small impact on the overall U.S. gross national product because the U.S. economy is large compared to that of Mexico and because there is already much unrestricted trade between the two countries. Several chapters consider how some sources of comparative advantage that cut across industries differential environmental regulations and wage differentials - may affect the outcome. These are followed by chapters that assess the locational effects on U.S. production, either from the viewpoint of which metropolitan areas will gain employment or of the scale effects-transportation cost-tradeoff. Concluding chapters address the effect of the NAFTA on several individual U.S. sectors such as agriculture, automobiles, and financial services. Peter M. Garber is Professor of Economics at Brown University. Contents: Introduction, Peter M. Garber. Environmental Impacts of a North American Free Trade Agreement, Gene M. Grossman, Alan B. Krueger. Wage Effects of a U.S.-Mexico Free Trade Agreement, Edward E. Leamer. Some Favorable Impacts of a U.S.-Mexico Free Trade Agreement, J. Vernon Henderson. Mexico- U.S. Free Trade and the Location of Production, Paul Krugman, Gordon Hanson. Trade with Mexico and Water Use in California Agriculture, Robert C. Feenstra, Andrew K. Rose. The Automobile Industry and the Mexico-U.S. Free Trade Agreement, Steven Barry, Vittorio Grilli, Florencio Lopez-de-Silanes. Opening the Financial Services Market in Mexico, Peter M. Garber, Steven R. Weisbrod.

This publication displays the menu for choice of available methods to evaluate the impact of Free Trade Agreements (FTAs). It caters mainly to policy makers from developing countries and aims to equip them with some economic knowledge and techniques that will enable them to conduct their own economic evaluation studies on existing or future FTAs, or to critically re-examine the results of impact assessment studies conducted by others, at the very least.

Explains process of importing goods into the U.S., including informed compliance, invoices, duty assessments, classification and value, marking requirements, etc.

The United States – Mexico – Canada Agreement (USMCA) was signed on November 30, 2018 and aims to replace and modernize the North-American Free Trade Agreement (NAFTA). This paper uses a global, multisector, computable-general-equilibrium model to provide an analytical assessment of five key provisions in the new agreement, including tighter rules of origin in the automotive, textiles and apparel sectors, more liberalized agricultural trade, and other trade facilitation measures. The results show that together these provisions would adversely affect trade in the automotive, textiles and apparel sectors, while generating modest aggregate gains in terms of welfare, mostly driven by improved goods market access, with a negligible effect on real GDP. The welfare benefits from USMCA would be greatly enhanced with the elimination of U.S. tariffs on steel and aluminum imports from Canada and Mexico and the elimination of the Canadian and Mexican import surtaxes imposed after the U.S. tariffs were put in place.