ABSTRACT

The North American Free Trade Agreement (NAFTA) represents an historic policy shift, one that raises a variety of theoretical and practical questions many of which are familiar to students of the Western European experience: Why do countries pursue greater economic integration? What explains the timing of these policy shifts? And, can the countries work together effectively within the new frameworks? The economic reasons for why countries pursue such agreements as NAFTA are multiple: Free trade agreements are a strategic response to the realities of globalization and to the emergence of vigorous new trading blocs; they help countries reap the joint benefits of comparative advantages and the economies of scale that come from controlled access to large markets. From the North American perspective, NAFTA has also been interpreted as the logical extension of evolving patterns of closer commercial cooperation. 1 From that standpoint the puzzling question is not why NAFTA was signed but why such an agreement was not formalized decades ago.