Congressional Research Service
The Library of Congress
CRS Report for Congress
Received through the CRS Web
Order Code RS21737
February 13, 2004
NAFTA at Ten:
Lessons from Recent Studies
J. F. Hornbeck
Specialist in International Trade and Finance
Foreign Affairs, Defense, and Trade Division
On January 1, 2004, the North American Free Trade Agreement (NAFTA)
completed its tenth year and most of its provisions are now implemented.
a free trade agreement (FTA) that effectively added Mexico to the U.S.-Canada FTA
completed in 1989.
Its anniversary has sparked numerous evaluations, which are
particularly relevant as the United States pursues free trade agreements with multiple
Latin American countries.
Most studies found that NAFTA’s effects on the U.S. and
Mexican economies to be modest at most.
This report provides an analytical summary
of the economic lessons reached in support of Congress’s role in the trade policy
It will be updated as needed.
Free trade agreements are supposed to enhance the welfare of participating countries,
so evaluating their effects is a valuable exercise.
NAFTA is particularly relevant to the
bilateral trade agreements being considered by the United States today because it was the
first trade agreement in a non-multilateral setting between a developing and two
As such, it is important to note that this report focuses on U.S.-
Mexico issues, not because Canada is unimportant, but because the U.S.-Canadian free
trade agreement predates NAFTA, is less controversial in the eyes of most trade critics,
and is less relevant (because it entails trade between two developed economies) to the
pending trade agreements with Latin America.
Further, because trade between Canada
and Mexico remains very small, the trilateral trade agenda is still only emerging, although
there is growing interest in analyzing immigration, security, and other issues within this
This report evaluates four studies produced by the Congressional Budget Office
(CBO), the World Bank, the Carnegie Endowment for International Peace, and the United
States International Trade Commission (USITC).
These assessments of NAFTA, by and
large, are analytical in nature, use established methodologies, caveat their own work to
reflect limitations of the research, and draw on academic rather than special interest
The details of their methodologies are not reproduced here, but it is important
to note that they faced similar research challenges.
These include: 1) isolating the effects